If you’re a buy-to-let landlord or fancy becoming an investor, the government’s stamp duty holiday is an opportunity to expand (or start) your portfolio. Here’s where to invest to make the most of the reduced rates.
Stamp duty holiday: top places to invest in the UK
Reduced stamp duty rates will be in place until 31 March 2021. And while buy-to-let investors will still have to fork out 3% on purchases up to £500,000, it’s a reduction nevertheless.
To make the most of the unprecedented stamp duty holiday, insurance broker CIA Landlord conducted a survey of the best places to invest. Their research looked at the cheapest average house prices and compared them to the highest rental yield.
The study revealed the best buy-to-let hotspots based on profitability were in the north of England, with the top three cities identified as Salford, Manchester, and Leeds. In fact, CIA Landlord discovered the North and the Midlands provided the most attractive investment opportunities overall. The only southern cities to make the top 25 were the coastal cities of Portsmouth and Southampton.
The in-depth study revealed that the top ten cities worth investing in while the stamp duty holiday is still in play are:
Where to make the biggest savings
If it’s stamp duty savings you’re interested in, historic cities Edinburgh and York hit the top spots. Still within the top 25 for profitability (positioned 22nd and 25th respectively) these popular and well-regarded destinations could be a wise investment choice if you’ve got the funds.
Based on the reduction, the stamp duty holiday could mean you save a staggering £4,606 on an average priced property in Edinburgh (costing £292,125). York (voted best place to live in the UK by the Sunday Times) wasn’t far behind with average savings coming in at £4,299 based on a house costing £285,974.
Where not to invest
Of course, no survey is complete without identifying the poor relations. In almost direct contrast to the best buys list, the list of lowest profitability rentals were firmly rooted in the south. If you are in the market for a rental, then here’s where the study suggests you avoid making a buy-to-let investment despite the stamp duty holiday:
- High Wycombe
The best (and worst) London investments
If you’re keen to build up a London-based portfolio, Havering, Newham, and Barking & Dagenham took positions 1, 2, and 3 for profitability. In terms of savings, Hillingdon investors could save nearly £14,000 on stamp duty followed by Harrow (£13,393), and Sutton (£13,346).
Unsurprisingly, with its hefty price tags, Kensington & Chelsea topped the list of ‘least sensible’ London areas to invest in. Monthly rent in the fancy borough averages £4,003, with a so-so profitability rating of 5.46/10). However, the average house will set you back an eye-watering £2,143,009. So, unless you actually do have a spare few million in the bank, it’s probably well justified as the least sensible option.
Hotspots based on house size
If you’re a buy-to-let investor focusing on certain types of properties, Grimsby came top for one- and three-bed properties. Doncaster, with its family friendly facilities and grand Georgian architecture, is also worthy of investment for larger four- and five-bed family homes.
Does the stamp duty holiday make it wise to invest?
With headlines speculating whether a second wave of Covid-19 could jeopardise the housing and rental market, it might seem an odd time to invest. But, as history shows, property does have a remarkable ability to bounce back.
Plus, headlines are forecasting a 14% fall in house prices. With that in mind, can you afford not to take advantage of the stamp duty holiday?
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