Many landlords and letting agents will have been braced for some significant movements in the property market in 2018, as a range of new government initiatives come to bear on it. One of the most notable is the abolition of stamp duty for first-time buyers purchasing a home for up to £300,000, or the first £300,000 of a home costing more, up to £500,000.
For buyers, what this has meant is that in most of the country the typical home will attract no stamp duty. Only in most of London and parts of the home counties are typical homes more expensive than £300,000, with just a few boroughs in the most fashionable parts of the capital having an average price above £500,000.
All this might have led letting agents and landlords to imagine a lot more of their tenants would take the plunge and become first-time buyers, helped by the fact that buying had suddenly become a bit cheaper.
Notwithstanding the fact that the announcement came in a November Budget – meaning many people will have wanted to wait until after Christmas to act – evidence provided by the Royal Institution of Chartered Surveyors (Rics) suggests that such a trend is likely to be weaker than anticipated.
Far from a mass exodus of tenants, landlords appear set only to see a slightly larger number of renters leaving to become homeowners. 86 per cent of Rics members interviewed for the body’s January survey reported that so far there was no sign of any response from first time buyers to the stamp duty measure.
It could be that many first-time buyers simply see the reduction in the overall cost as not being enough to help them push ahead with making purchases. Alternatively, it could be a question of timing; the survey found the number of respondents reporting a fall in housing market activity in December exceeded those witnessing an increase by 15 per cent. This represented a marked drop on November, when the level of activity was more balanced.
However, 66 per cent of respondents do not think the stamp duty move will have any significant long-term impact, whereas only 12 per cent think it will.
Notwithstanding some seasonal factors, the market is certainly not showing any great signs of hotting up yet. However, Rics did find there was a more upbeat mood over the market as a whole for prices and sales.
At the same time, the survey also assessed where the rental sector is at just now. It noted that tenant demand continued to drop in December – at least on a non-seasonally adjusted basis – although not as fast as in previous months. However, new landlord instructions dropped at a slightly quicker rate.
Overall, this left the overall balance of expectations for growth in slightly more positive territory, with nine per cent more respondents expecting to see growth than contraction. This compared with a positive reading of only four per cent in November.
What that suggests, therefore, is that the current state of the rental market may be affected by many things, but any decline is likely to be a lot more to do with the higher stamp duty charges for buy-to-let investors than the exemptions granted to first-time buyers.