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TODAY'S OTHER NEWS

Buy-to-let flood drives prices higher

The flood of buy-to-let investors looking to beat the forthcoming 3% surcharge on stamp duty is driving house prices even higher as supply continues to stagnate.

The latest RICS UK Residential Market Survey shows that 74% of respondents expect an increase in buy-to-let purchases in the run up to 1 April.

Around 49% more surveyors also reported prices have risen in January.

They expect house prices to rise further over the next 12 months, with 72% more contributors expecting prices to increase rather than fall.

The UK housing market has seen a rise in supply for only the third time in 18 months but it does not match the surge in demand.

Stock remains low with 46 properties per branch, up from 44.5 but still down 21% compared to a year ago.

Meanwhile supply in London increased significantly in January, with 58% more respondents noting an increase, but sales instructions elsewhere across the UK were much flatter.

RICS chief economist Simon Rubinsohn said: “The rise in new instructions in January, although modest, is very welcome.

“However with buy-to-let investors rushing to get into the market ahead of the stamp duty hike, the near term pressure on prices is if anything intensifying despite a higher level of supply.”

Rubinsohn said surveyors expressed concern that some existing landlords will either gradually scale back their portfolios or exit the market altogether as the more penal tax regime begins to bite.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said that with stamp duty paid upon completion, time is fast running out for investors.

“New builds may seem a good option given there is no onward chain – but many of these are sold well in advance, and any delay in property construction could tip completion beyond the deadline.”

Murphy said the market should settle into a more regular rhythm once the stamp duty deadline has passed.

“However, the RICS survey indicates house prices will have a notable upward momentum over the next 12 months, which is troubling for first-time buyers.”

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