Despite the detrimental changes to the tax regime introduced by George Osbourne (the most significant of which being the phasing out of tax relief on mortgage repayments, as well as the 3% hike in stamp duty on new investment purchases), the appetite for Buy To Let amongst Landlords and investors has remained strong during 2018. Not only that the tax break on stamp duty for first time buyers has created a huge amount of competition for homes priced between £100k-£200k. This section of the market has been hot all year in Leeds and these properties have sold fast!
Because of this level of demand, many landlords have struggled to find good deals and finding properties below market value (the much sought-after BMV) has often been a bit like finding a needle in a hay stack. Why would Vendors or Agents price them low in this market when they can sell for market value, or sometimes even slightly over market value? Finding BMV deals is always tricky in a high market and this summer the lower end of the property market has been riding the crest of a wave.
In addition, the typical first time buyer has a big tax advantage over the landlord buyer right now with an instant saving of 3% of the purchase price in SDLT within this price bracket. On a purchase of £150,000, that’s an extra £5000 a first time buyer has to negotiate with. It’s no wonder it’s been tough going for landlords looking to add to their portfolio this year!
But now we’re approaching the end of the selling season (today is Halloween), and would-be vendors and would-be buyers mostly have it in mind to settle in for the winter. Best to keep warm and cosy on the long dark nights that approach is the typical point of view at this time of year. Most thoughts of a sale are for another day early next year to ahead of catching the Spring buyers.
That said, some Vendors need to sell now, or will still need to list their homes this winter. They may have sold already, they may still be on the market, or they may have just found out they are relocating with work shortly.
The savvy investment buyer will know that this can be a good time to pick up deals. Yes there is less stock on the market, but the market is cooling and with it so is demand from other buyers. In fact Zoopla recently published figures showing that the 38% of Vendors had reduced their price in the last 6 months. Some Vendors are becoming frustrated and more motivated, creating good investment opportunities for those still actively looking to pick up deals.
December and January are typically a good time for this. A good tip is to look for vacant properties – the vendor will be paying council tax and having to heat the property through the winter months creating more motivation to sell, which is compounded by the lack of viewings they are getting at this time of year. While most people are sleeping off the Christmas turkey, smart property investors are out viewing properties!
It’s not only the end of the selling season and the start of the winter that could bring good opportunities. We are fast approaching the Brexit deadline and at the time of writing Britain hasn’t yet negotiated a trade deal. The possibility of a major correction in the economy and on house prices are on many people’s minds. These are interesting times in the property market and for investors. The question is whether to wait, and how for long? I’d say that depends on individual deals, but now is the time to start viewing and negotiating!
The deals are sure to follow, and there’s bound to be more out there than there was in 2018…
If you need some advice finding good Buy To Let deals in Leeds, please get in touch.