£3,700 boost to Sheffield First time buyers
There’s a whole legion of wannabe Sheffield 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 Sheffield landlords with cash at the ready. Since the start of April 2016, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Sheffield buy to let landlords has dropped away, in the interim, it offers Sheffield first time buyers (FTBs) 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 Sheffield currently standing at £126,600, that means if our Sheffield FTB went up against a Sheffield landlord, the landlord would have to pay an additional £3,798 in stamp duty. Early anti-dotal evidence from fellow property professionals in the city is suggesting landlords are reducing their offers slightly on Sheffield 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 Sheffield property market as a whole.
Since 2011/12, the Sheffield property market has performed very well indeed. Over the last 12 months, £1,224,436,956 has been spent buying 7,134 Sheffield properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 0.5% lower, yet 3.1% higher year on year. These figures are nowhere near the heady days of 2003 (May to be exact), when Sheffield property prices rose by 27.4% in 12 months.
So as property values in Sheffield (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 Sheffield 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 Sheffield Property Market Blog https://sheffieldpropertyblog.com take advice on what or not to buy and what to pay, meaning Sheffield landlords are being more calculated with their Sheffield BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Sheffield, 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 Sheffield landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Sheffield investors will return for the right Sheffield property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Sheffield FTBs could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!