Skip to main content

Estate agents fear slump , after last-minute dash buy-to-let rush in UK




Estate agents are braced for a slump in demand and cooling prices for houses and flats as a new stamp duty tax on investment properties and second homes knocks the wind out of Britain's buy-to-let boom. 

Buyers raced to complete deals ahead of Friday's introduction of a 3 per cent surcharge on Stamp Duty ,this resulted in a 71 per cent surge in home sales by value to £17bn in the two weeks.


The stamp-duty stampede to buy second homes led to £17 billion of house sales across the UK over the last two weeks - £5.4 billion of which were in London.


Around £3.4 billion of properties were exchanged yesterday alone, a 141 per cent increase on the same day last year, as solicitors cancelled holidays and worked until midnight to rush through completions before the April 1 deadline. 

Estate agents, sellers and buyers delivered documents by hand across London to avoid postal delays. 

"In one case, we even rushed down to the Eurostar departure lounge to catch a vendor who had moved out of his property and still not signed his completion statement. Luckily, we caught him 10 minutes before the train departed for Paris," says Jonathan Hudson, London executive of the National Association of Estate Agents.


Countrywide estimates that second home and buy-to-let purchasers saved £275 million on stamp duty by exchanging before the changes come into effect.


"Second home buyers of all types, particularly investors, developers and holiday home buyers rushed to beat the additional three per cent stamp duty levy, meaning second home buyers made up over half of the market (55 per cent) in March, compared to 20 per cent the same time last year," said a research spokesman at CW PLC.

The most dramatic increase in transactions took place in traditional London buy-to-let markets such as the City, Fulham, Clapham and Islington, according to Marc Goldberg, head of sales at Hamptons International. While commuter-belt areas such as Caterham, Harpenden and Windsor were "alive" with extra activity, second-home markets, such as Bath and Cheltenham, also had big rises in sales.

Landlords, estate agents and solicitors were in a last-minute rush to complete property deals ahead of a stamp duty rise that took effect today.

Anyone buying a home that is not their main residence now faces the 3% Stamp Duty surcharge.

In Scotland, the equivalent tax - the Land and Buildings Transaction Tax (LBTT) - is also being up-rated.

From midnight on Thursday the duty on a property sold for £200,000 will rise from £1,500 to £7,500.

Buy To Let Price Bands 



"It's been very chaotic. But the real problems will be today," said Rob Hailstone, of the Bold Legal Group.

The problems have been compounded by the fact that some of the fine detail was only announced in the Budget just over two weeks ago.


"It's been ridiculously busy. Buyers have been saying they want to rush it through, because they don't want to pay the surcharge," said Mr Hailstone.



'Bottleneck'

While the theoretical deadline is midnight, the practical deadline is late on Thursday afternoon, when the banks close.

Sales can only be completed when the money comes though from the lender.

"It's was a busy crazy day," said Martyn Baum, the President of the National Association of Estate Agents.

"We've all got a bottleneck, and a huge amount of deals before the deadline. I've heard of estate agents and conveyancers staying open till 10pm, and then opening again at 5am this week."

The stamp duty surcharge will affect landlords purchasing buy-to-let property, or anyone who is buying a second home.

But many ordinary buyers are involved in chains which involve an investor somewhere along the line - so they too have been caught in the chaos.


Earlier this week, the Bank of England announced plans to subject landlords to a series of new affordability tests,the Bank of England has proposed.

It suggested that lenders should be much stricter when deciding whether or not to grant landlords a mortgage.

Instead of just taking their rental income into account, the Bank wants lenders to look at their wider financial situation as well.
If adopted, the new rules could reduce lending to landlords by up to 20% over the next three years.



The Prudential Regulation Authority (PRA) - an arm of the Bank - has recommended that banks and building societies take account of:

  • all the costs a landlord might have to pay when renting out a property

  • any tax liability associated with the property
  • a landlord's personal tax liabilities, "essential expenditure" and living costs.
  • a landlord's additional income - where this is being used to support the borrowing. This income should be "verified".
  • Their personal income and expenditure could be scrutinised by lenders before they decide to give them a mortgage.
  • Landlords may also have to prove that they could afford a rise in borrowing costs.

"The changes the Chancellor has made to mortgage interest tax relief and higher stamp duty for landlords will have enough of an impact on buy-to-let without the need for further interference from the Bank of England."

Before the PRA announcement lenders had expected the buy-to-let market to expand by 20% a year over the next few years, in spite of the tax changes.

If the measures are adopted, the PRA believes such growth will slow to 17% a year.
The PRA consultation will last until 29 June 2016.


Bucking the Trend 


However, Grainger [LON:GRI], Britain’s biggest listed residential landlord, is nevertheless well positioned to exploit the private rented sector despite the tax changes.

The Newcastle-based owner of £2.8bn worth of UK property is investing heavily in its home market, amid predictions that private renters will outnumber homeowners within a decade.






Grainger, which last year posted revenues of £244m and pre-tax profits of £50m, is seeking to capitalise on the rapid growth of “generation rent” as lending has become stricter amid a shortage of affordable housing. For many younger people, renting is expected to become the norm well into adulthood.




The FTSE 250-listed company recently unveiled plans to spend £850m building and buying UK rental properties over four years.

The strategy to simplify Grainger’s business is spearheaded by new chief executive Helen Gordon, who previously led moves by RBS to deleverage its distressed property book.

Grainger has begun by selling off assets to fund new-build rental homes. It sold its British equity release arm to private equity for £325m in January, followed by the sale of a £94m loss-making German property portfolio
Heitman JV . 

It means that despite an expected plunge in revenues next year, as its business shrinks, pre-tax profits are expected to increase by 8pc to £54m in the 12 months to October 2016.

Following recent falls in Grainger’s share price, the company is trading at a 22pc discount to its net asset value, suggesting that current prices have yet to reflect its promising new strategy.

The plans were set in motion last month with the acquisition of a £99m, 614-home development in Salford, Clippers Quay, which will be completed this year. The company has also submitted plans for a 232-home development in west Berkshire.



Further Reading 



make £10k building houses in Microsoft Minecraft ,for an estate agent, just make sure they're not PurpleBricks !
Donald Trump's Son-In-Law Jared Kushner Hasn't Made The East Village Great Again, Tenants Say. Sad

The high-street estate agent of the future : poncey PURP

Microsoft's Build 2016 Watch Live Highlights and more Event @onthemarketblog

House prices update February 2016 from Land Registry

Underwriting standards for buy-to-let mortgage contracts ,– CP11/16,PRA ,Bank of England warnings on Brexit ,clamp down on buy-to-let mortgages

Hometrack UK Cities House Price Index February 2016 , reports unseasonal acceleration in house price growth across UK cities in last three months

renting your property to short-term is a booming market: Nine top tips for Airbnb property letting success ex husband was deliberately run over in car, by estate agent multiple times


UrPad Online new Hybrid online estate agent for Wales ,rolled out by Property Industry Experts,Caerphilly

easyProperty a 20 20 vision Yahoo Google Bing , Zoopla, Rightmove, Facebook ,twitter

online estate agent settled.co.uk takes on high street receiving more funding

Former Cricket Team Aces Join the Online EstateAgent business model thehomecloud.co.uk

Tepilo.com online real estateagent sees 400% increase in turnover with £10m target set for 2016

Barclay Brothers son's YOPA , expanding into the Midlands


Upestates Online estate agency & will be expanding with 7 new offices in Birmingham Leicester & Nottingham

coca cola tango free fall on Osbornes sugar tax & How Jamie Oliver made the big boys listen

New UK Property App Development Service For Estate Agents launched by iDevelopers

PurpleBricks change marketing strategy

shock horror Hang on ,,,Why Land Registry Privitisation, is a good thing & long over due

easyProperty a 20 20 vision Yahoo Google Bing , Zoopla, Rightmove, Facebook ,twitter

Canada’s House Price Dilemma >Monetary Policy and Financial Stability

Zac GoldSmith > Launches Housing Manifesto > off plan mortgages high street lenders, government & 6 London Local Authority pension funds

Purplebricks - And the teams just keep on growing! - online hybrid estate agent @onthemarketblog

Housing Minister Brandon Lewis' speech outlines the government's housing aims including its intention to deliver 1 million homes by 2021

Global demand for prefabricated housing is forecast to increase 2.7% per annum through 2019 to 3.4 million units

David Bowie, Beautiful, Romantic Mustique ,stunning , Caribbean Villa designed by Arne Hasselqvist

UK house prices increased by 7.9% in the year to January 2016, up from 6.7% in the year to December 2015.

Average British home price, tips over 300,000 pounds @onthemarketblog

Running Costs - Zoopla tool, Phil Spencer explains, Dan the Detective Zoopla new TV advert

Shelter launch Great Home Debate ,Ellie Goulding shows her support on twitter social media UK

current account deficit has partial defence against shock says BoE's Forbes

propertyeye.net a new property , residential homes website, for sales and lettings ? Iain Duncan

Smith resigns over planned disability benefit changes,indefensible changes

UK interest rates remain balanced , though sterling hit by EU vote says BoE

No Brexit for me, why I'm staying in a reformed EU and so should you

Rio Ferdinand and housing minister Brandon Lewis launched a new scheme to build thousands of affordable homes across UK

David and Samantha , morning after: how Brexit divorce gets messyPropTech ,WILL change ,the global economy“beyond recognition” Rics at MIPIMconference

Starter Homes: Unlocking the Land Fund Brandon Lewis MP

Video Bank of England Mark Carney Governor quizzed on the risks of Brexit ,Sir Jon Cunliffe

Cyber Criminals Phishing Scam Email, targets rightmove property portal, inc other property sites

Locally-Led Garden Cities , Villages Towns in the United Kingdom

coca cola tango free fall on Osbornes sugar tax

Good News for Airbnb Londoners - online MicroEntreprenuers

AirBnb / online, Ebay Amazon Start Up, micro-entrepreneurs rent property income, internet ,homes

#Budget2016 George Osborne ,Stamp Duty Surcharge ,Tax, Capital Gains Tax,Housebuilding

UrPad Online new Hybrid online estate agent for Wales ,rolled out by Property Industry Experts,Caerphilly

Facebook Founder Zuckerberg settles dispute with no pay out to property developer Voskerician

new affordable housing hits record low in london data shows

Days of Chaps payment numbered ,Central banks rival Bitcoin new RSCoin super currency

what the VLOG ? London property developers, Hackney Dalston E8 Vibe illusion

technology law - eddies from property portals boliga.dk and now zoopla.co.uk

Online estate agents, expecting sales bonaza, as sellers shun costly high street rivals

A Welsh developer of student accommodation ,plans March 2016 IPO + Wales tallest building

Help to Buy: mortgage guarantee scheme, Quarterly Statistics, March 2016

number of high street estate agents going bust up 16% , online estate agents market share up dictated by consumer not industry

NHBC NEW HOME STATISTICS ANNUAL REVIEW 2015,English Housing, Papworth Disability Trust ,Joseph Rowntree & Bungalows !

why Frank Whittle and the Saville row tailor have more in common with Warren Buffet

FT first 'Rightmove maintains grip in battle of property portals @onthemarketblog

Brick-And-Mortar Crumbling? Don't Believe It > Forbes > Leadership

Foxtons high street estate agent facing landmark claim for £2million from group of 55 landlords

Building a new deal for London: Final report of the London Housing Commission

'Kleptocracy tours' 35,000 London properties currently have unknown offshore owners.

Pop-up housing could cut cost of London’s rental market & help UK housing Crisis

Chinese hunt for property bargains in Manchester amongst others say Pinnacle Alliance Property Developer

Property pain Investigation ,service charges increasing rapidly with 30 % of firms increasing fees

UK's largest property developers accused of 'profiting' on the back of the housing crisis

Private rental prices grew by 2.7% in England

Rental prices increased in all the English regions over the year to January 2016, with rental prices increasing the most in London (3.9%).

Property pain Investigation ,service charges increasing rapidly with 30 % of firms increasing fees

Foxtons report 4% revenue increase to City, despite Prime Central London property experiencing a dead-cat bounce

Property Partner successfully completes £15.9M ($22.4M) funding round

Nested - Start Up , property online disruptor to quick sale homes ?

Building a new deal for London: Final report of the London Housing Commission

high street estate agency valuations – flattery will get you nowhere by @emoovceo

Start me up: Why London needs open workspaces for creativity, innovation and growth

Live inquiry application launch 14 th March say Land Registry Marketing Manager

LA police testing knife found on OJ Simpson property - reports

'Kleptocracy tours' 35,000 London properties currently have unknown offshore owners

UK's largest property developers accused of 'profiting' on the back of the housing crisis

Pop Up Housing a solution not just for London but the UK

estate regeneration statement GOV UK DCLG ,Lord Heseltine ,Brandon Lewis MP

Digital Mortgage service: making improvements again & again

Buy-to-let investors 'could face losses'

Uber's property footprint unmatched among San Fran Bay Area ,Tech StartUps
Guests staying with AirBnB for the super bowl top 15,000

Nobroker.com Homes, one step closer to making estate agent obsolete , new round of funding

OnTheMarket overseas properties , Britons with holiday homes in France face paying extra 10% in tax if they sell the property following a Brexit

Guests staying with AirBnB for the super bowl top 15,000

FT first 'Rightmove maintains grip in battle of property portals @onthemarketblog

Morrisons Super Markets signs deal to sell food to Amazon online customers

Amazon eyes up UK restaurant delivery market

Booking.com Launches of Passion Search ,Don’t battle your passions, unleash them

David Cameron calls EU referendum for June 23 2016 Official Statement @onthemarketblog

zoopla.co.uk selects Birst's Cloud BI platform for data integration from all its brands and apps

Good News UK mortgage approvals hit two-year high BoE

IMF Statement: LUXEMBOURG: Concluding Statement of the 2016 Article IV Consultation Mission

Spanish house prices 2015 see rise highest rise 2007 crash , stabilisation of housing market, idealista.com

No Brexit for me, why I'm staying in a reformed EU and so should you

Scotlands House prices rise and sales grow ros.gov.uk

An analysis of recent trends in the Irish rental market 2015 in Review

fourth quarter 2015: First-time buyers took out 87,100 loans to purchase homes. + house prices in UK

GeoPhy Exodus-from-EU-may-spark-correction-in-the-rental-market.html

1st of March David Cameron St David's Day message "wonderful country and a great part of the United Kingdom"

Amazon eyes up UK restaurant delivery market

Bank of England's unease over market's rate view Carney & Shafik


Morrisons Super Markets signs deal to sell food to Amazon online customers

Brick-And-Mortar Crumbling? Don't Believe It > Forbes > Leadership

Chinese authorities shut down microblogging accounts belonging to a real estate mogul

Foxtons high street estate agent facing landmark claim for £2million from group of 55 landlords

Brexit ,purplebricks.com investor, impacts on the property market overall and on aggregate consumption in the economy will be limited