It is inevitable that the recent increase in Stamp Duty Land Tax (SDLT) on ‘additional residential properties’ will give some buyers pause for thought and may lead to a slight reduction in property values.
That being said, it is important to recognise that – according to the Government’s statistics – ‘additional residential properties’ only comprise about 20% of the residential property market. Given this, the vast majority of the national market will not be directly affected by the new SDLT rates.
Based on my discussions with my investor and developer clients and contacts, I do not think that most of them will be put off buying residential property simply due to the additional SDLT. Instead, they will either absorb the extra 3% into their budgets, or try to reduce the purchase price, or retain investment properties for longer (so as to amortise the extra cost).
In London and other prime areas around the country, I can see it being business as usual at the more entrepreneurial end of the market with investors and developers driving hard bargains and competing fiercely over good properties.
I think that the biggest issue with the residential property market will actually come from sellers over-valuing their properties and refusing to negotiate. Good properties will always find buyers but sellers who have unrealistic expectations about their properties may struggle to sell.
Head of the property department at boutique West End law firm Clintons