£4,100 boost to Dundee First time buyers
There’s a whole legion of wannabe Dundee 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 Dundee 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 Dundee buy to let landlords has dropped away, in the interim, it offers Dundee 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 Dundee currently standing at £137,100, that means if our Dundee FTB went up against a Dundee landlord, the landlord would have to pay an additional £4,113 in stamp duty. Early antidotal evidence from fellow property professionals in the city is suggesting landlords are reducing their offers slightly on Dundee 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 Dundee property market as a whole.
Since 2011/12, the Dundee property market has performed very well indeed. Over the last 12 months, £312,914,400 has been spent buying 2,164 Dundee properties. So as property values in Dundee (and the UK as whole) start to stabilize and come back to some kind of balance, I am beginning to see savvy landlords view the Dundee 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 land and transaction tax change has made more and more landlords, after reading the Dundee Property Market Blog www.thedundeepropertyblog.co.uk, take advice on what or not to buy and what to pay, meaning Dundee landlords are being more calculated with their Dundee BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Dundee, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).
Now I know a lot of Dundee landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Dundee investors will return for the right Dundee property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Dundee FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!