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HMRC figures reveal that 25% of all properties bought this summer were buy to let investments or second homes. This indicates that government tax changes, which were designed to curb the buy to let market, haven’t worked as well as the government had hoped they might.
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A 3% stamp duty tax on second properties was introduced in April, but instead of discouraging landlords, HMRC has earned an extra £440 million in tax revenue in the third quarter of this year.
Buy to Let Purchases Spiked in April
There was a huge spike in sales around April, when many landlords rushed to beat the April 1 deadline for the stamp duty increase. As a result, the number of purchases registered for second or subsequent properties by buy to let investors dropped. However, the market soon picked up again, suggesting that government measures to make the property market less attractive for buy to let investors is not working. It may cost landlords more to invest in property, but they are still keen.
Buy to Let Outperforms Other Investments
With interest rates so low, property is currently outperforming all other investment classes, including government bonds. Investing in property is safer than investing in the stock market. Because of this, many landlords are using their property portfolios as a pension pot, even though it now costs three times as much to buy a house worth more than £40k.
Unless interest rates go up, it looks like property will continue to be something many people choose to make money from.
