Investors purchasing buy-to-let properties and second homes consisted of three out of every five prime London property sales during the first quarter of 2016, says research published by estate agent Marsh & Parsons. These investors and additional home buyers, consisting of nearly 60% of all prime property sales in London, also helped boost the number of purchases made in cash.
The most prolific buyers in the capital’s prime property market were buy-to-let investors who made up 36% of all sales during the first quarter, which is hardly unexpected thanks to the Stamp Duty increase which was introduced on April 1st. That increase meant there was an additional 3% of Stamp Duty to be paid on all additional properties, whether they were intended to be rented out or kept as second homes.
A Significant Rise on the Previous Quarter
This 36% of sales coming from buy-to-let investors is a big increase of 10% on the previous quarter, that of the last three months of 2015. From October to December last year, only 26% of overall sales could be attributed to investors rather than people buying a home to live in themselves as either their only or second homes. The investor numbers had been declining throughout 2015 before the sudden jump in 2016’s first quarter. The fourth quarter of 2014, for example, saw an even higher share of buy-to-let investors at 37% before that number slowly started to dwindle down.
Second Home Buyers Also Increase During First Quarter
According to Marsh & Parsons’ London Property Monitor report, people buying additional homes are the second highest type of buyer in the prime property market of London. They now account for 23% of the market, which is an even bigger jump from the fourth quarter of 2015 where their share of the market was just 14%.
The Chief Executive Officer of Marsh & Parsons, David Brown, said of the people buying up additional homes that, “Investors will always be the stalwarts of the prime London property market as it is the golden goose of capital returns. But second home owners were much more prominent in the market than we would typically expect.”
Blame it on the Stamp Rise
Mr Brown also made it clear that the numbers from the first quarter of 2016 is no ordinary trend, and that the figures coming in via these reports are massively influenced by the Stamp Duty rise that began on April 1st.
He said, “Naturally, the knee jerk reaction among [buy-to-let investors and second home buyers] has been to hurry through property purchases before the deadline, and make savings while they can. Now that the ruckus has passed, we’ll see much more orderly transactions over the summer months as the market rebalances toward first time buyers and other owner occupiers for whom it will just be business as usual.”
That’s good news for a lot of people such as first time buyers and second steppers, not to mention us property news writers who can finally stop going on about how the Stamp Duty rise will affect everything.
