The additional 3% SDLT for investors and second home buyers will directly affect the majority of their prospective buyers.
Add in the problems in Asia and Sterling’s recent strength against Asian currencies and suddenly the Cornucopia of international investors appear to be drying up.
As you know, this is something that I predicted would happen. The developers are reacting in the only way they know how: offering incentives. At one development we were told you will now receive:
On the 2 bed apartments, it’s a straight 3% cashback. If you’re an investor it will be the extra 3% stamp duty paid, if owner occupier 3% back on completion. For the 1 beds, it’s 5% cashback plus a 6k furniture pack.
- Guaranteed 5% yield for one year (regardless of whether or not a tenant is found)
- Developer to pay the property management costs for one year
- Developer to pay service charge for one year
- Developer to provide full furniture pack from Box97
- Purchaser to be provided with two parking spaces (as opposed to the one that comes as standard)
Frankly I think it is still too early to be buying in many developments (there are exceptions) and that there will be opportunities in month to come. However, if you must buy now in a new development, then negotiate hard.