Rise in ‘gifted’ deposits before Stamp Duty deadline
A number of buy-to-let investors were ‘gifted’ financial assistance in order to secure funds for a deposit to beat the Stamp Duty deadline, according to a new report.
Research conducted by My Home Move found that the number of investment properties purchased using a ‘gifted’ deposit rose by 5% in the first quarter of this year. Many investors were found to have turned to the bank of Mum and Dad in order to secure these deposits.
Gifted deposit increases
My Home Move based its analysis on a survey of over 20,000 transactions in a two-year period.
Talking about the results of the investigation, Doug Crawford, CEO of the firm, said, ‘when we talk about the Bank of Mum and Dad, people usually think of first-time buyers who are struggling to afford their first home. However in this instance we’re surprised that investors sought to utilise every avenue possible to secure their next property before the 1st April deadline. Asking for help through a gifted deposit in effect helping to bring forward their purchase date, will have saved them thousands of pounds in additional Stamp Duty charges.’[1]
Investors were found to have used their gifted deposits more prominently in both the East and West Midlands. A rise in investment of 6% and 12% respectively was recorded in these areas. However, investment in London and the South East fell by 4% year-on-year.
Rise in ‘gifted’ deposits before Stamp Duty deadline
Interesting Investment
Crawford continued by noting, ‘it is interesting that these investors, those who have had the deposit gifted, have made the decision to buy in areas outside of the Capital-suggesting that they either wanted to make their money go further by buying in less expensive locations, or there just wasn’t the stock available to buy in London.’[1]
‘And when we looked further into the data, we also discovered that these investors chose to purchase flats and maisonettes over houses, indicating that they were looking for properties they could easily rent out as opposed to second-homes-making them the buy-to-let landlords with a hotline to the bank of Mum and Dad.’[1]
[1] http://www.propertyreporter.co.uk/property/spike-in-gifted-deposits-as-investors-aimed-to-avoid-sdlt-hike.html