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Osborne's SDLT increase backfires

The South East offers the worst value for money but prices will increase by 5 per cent per annum for five years, survey finds

21 January 2016

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The treasury's decision to introduce an additional three per cent stamp duty land tax (SDLT) for buy-to-let purchases led to a three-month peak in demand in December 2015.

A survey conducted by the Royal Institution of Chartered Surveyors (RICS) shows that '16 per cent more chartered surveyors reported a rise in new buyer enquiries'.

The three per cent SDLT rise was announced by George Osborne in the Autumn Statement 2015 on 25 November, where he told the Commons: 'Frankly, people buying a home to let should not be squeezing out families who can't afford a home to buy.'

The change comes into effect in April 2016 and buyers appear to be increasing the pace of their purchase in order to beat the tax increase.

Simon Rubinsohn, chief economist at RICS, believes that if this really is the case, activity in the buy-to-let sector will increase further still in the coming months.

'The housing market has experienced an unusually buoyant December. Those in the industry have been speculating that this is the result of the chancellor's announcement last November,' he said.

'Potential buy-to-let investors are looking to pick up properties before the increased stamp duty levy comes into force next April. If that is the case, then we can expect to see the housing market heating up further over the next few months.'

The RICS survey also shows that although London, the South East and East Anglia offer the worst value for money, house prices in the areas will increase by five per cent per annum for the next five years.

Furthermore, 62 per cent of respondents to the survey from the South East said homes were either expensive or very expensive. Meanwhile 100 per cent of respondents from Northern Ireland and 92 per cent from the North of England said their area offers value for money.