Stamp duty changes lead to more home auctions

February 20, 2016 by Brendan

Landlords

Auction houses are reporting a sudden increase in business, as buyers hurry to make purchases before the new stamp duty regulations commence on 1st April this year.

During the last 12 months, the number of private sellers at auction houses has increased, thought to be due to buy-to-let investors wanting to purchase properties before April when the tax relief changes kick in, which will affect landlords. According to one auction house in London, Allsop, the number of private sellers increased to 25% during 2015, in comparison with the previous year’s 14%.

In February 2015, Allsop had 255 properties in its portfolio, but this year that number has increased to 311. Another auction house has just under 100 properties on its books, while it would generally expect no more than 75.

From 1st April this year, the chancellor announced that landlords and owners of second homes would pay a stamp duty surcharge of 3%, which is believed to be partially responsible for the increased activity at auction houses. An auctioneer at Allsop, Gary Murphy, stated that the company had seen an increase in the number of private buyers and sellers, in comparison with councils, housing associations and banks.

According to experts, auctions are often popular with buy-to-let investors as they present bargains and a fast completion time. Unlike buying through an estate agent, the fee that is pledged when the gavel falls is the price which is agreed, often with much lower fees. A CeMAP trained mortgage adviser will be able to help with locating the most suitable mortgage product, if required.