London buy-to-let investors’ grip on the Northamptonshire housing market is being loosened at last, giving local first-time buyers a chance to get on the ladder.
Relatively new rules on stamp duty mean that anyone investing in an additional property, which includes buy-to-let landlords and those buying second homes and holiday homes, have to pay an extra 3 per cent in stamp duty.
That is money that they have to pay, on top of the normal rate of stamp duty.
The extra stamp duty means that the average priced Northampton residential property – around £216,416 (according to HM Land Registry’s most recent figures for June, 2017) – would face a tax bill of £8,320.80.
The extra few thousand pounds in this one-off cost, plus the phasing out of tax relief on mortgage interest for buy-to-let properties, has had the effect of reducing demand among buy to let landlords.
In some quarters, buy to let investors have been blamed for at least part of the relentless rise in property prices that have seen local people on modest incomes struggling to achieve their dreams of a first home. Landlords themselves have a different point of view, pointing out that they are making homes available to local people for rent.
Among first time buyers from London also, Northamptonshire is something of a housing honeypot. Compared to the cost of a home in the capital, or even in Milton Keynes, the county has been hugely attractive even when the cost of commuting is added into the calculation.
It has made sense for a young family of first time buyers to get on to the housing ladder in Northants and pay for a train season ticket to get to and from work in London.
That will still be the case for first time buyers, but the loosening of the grip of cash rich investors and buy to let landlords has at last given local purchasers a better chance to achieve their housing dreams.
Northamptonshire property market and mortgage expert, Edward Cookman, of Barfield Financial Advisors, based in Billing Road, Northampton, believes local first-time buyers have been given a welcome ray of hope in the market.
“In many ways, this is one of the best times to get a mortgage to buy a property in Northamptonshire,” said Mr Cookman. “Interest rates are remaining at historic lows for the foreseeable future, there are schemes under the Help to Buy scheme that can assist buyers with buying options and the money is there for people who are even on modest incomes.
“However, the extra competition in the market from cash rich investors and buy to let landlords has not helped local people to get on the housing ladder.
“In the last six months however, I have noticed a dropping off in interest from landlords precisely because of the extra 3 per cent stamp duty on additional properties. That means more availability of properties for first time buyers, including those from Northamptonshire.”
Click here to let Barfield find the right mortgage for you