There’s a whole legion of wannabe Chelmsford 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 Chelmsford landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp dutyso whilst demand from some Chelmsford buy to let landlords has dropped away, in the interim, it offers Chelmsford 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 Chelmsford currently standing at £260,400, that means if our Chelmsford FTB went up against a Chelmsford landlord, the landlord would have to pay an additional £7,812 in stamp duty. Early antidotal evidence from fellow property professionals in the city is suggesting landlords are reducing their offers slightly on Chelmsford 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 Chelmsford property market as a whole.
Since 2011/12, the Chelmsford property market has performed very well indeed. Over the last 12 months, £876,600,896 has been spent buying 2,818 Chelmsford properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 0.4% higher, yet 9.9% higher year on year. These figures are nowhere near the heady days of 2003 (February to be exact), when Chelmsford property prices rose by 27.2% in 12 months.
So as property values in Chelmsford (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Chelmsford 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 Chelmsford Property Market Blog www.chelmsfordpropertyblog.co.uktake advice on what or not to buy and what to pay, meaning Chelmsford landlords are being more calculated with their Chelmsford BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Chelmsford, 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 Chelmsford landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Chelmsford investors will return for the right Chelmsford property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Chelmsford FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!