There’s a whole legion of wannabe Lancaster first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Lancaster landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Lancaster buy to let landlords has dropped away, in the interim, it offers Lancaster first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.
Looking at the average value of a terraced house in Lancaster currently standing at £144,000, that means if our Lancaster FTB went up against a Lancaster landlord, the landlord would have to pay an additional £4,320 in stamp duty. Early anecdotal evidence from fellow property professionals in the city is suggesting landlords are reducing their offers slightly on Lancaster properties to reflect the extra stamp duty.
Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Lancaster property market as a whole.
Since 2011/12, the Lancaster property market has performed very well indeed. Over the last 12 months, £183,519,765 has been spent buying 1,027 Lancaster properties. Figures from the Land Registry have just been released and month on month in our local area, property values are 0.6% higher, yet 3.2% higher year on year. These figures are nowhere near the heady days of 2004 (June to be exact), when Lancaster property prices rose by 27% in 12 months.
So as property values in Lancaster (and the UK as whole) start to stabilise and come back to some kind of balance, I am beginning to see savvy landlords view the Lancaster property market in a different light. Even with the spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Lancaster Property Market Blog (www.lancasterpropertyblog.co.uk) take advice on what or not to buy and what to pay, meaning Lancaster landlords are being more calculated with their Lancaster BTL purchases.
I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Lancaster. This of course in part reflects some uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).
Now I know a lot of Lancaster landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Lancaster investors will return for the right Lancaster property later in the year, especially if it is at the right price and offers a decent yield. However, in the meantime, Lancaster FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!