Kane Lennon, Associate Director, Savills Residential Development Sales Northwood In the 2015 Autumn Statement the Chancellor announced a higher rate of stamp duty on the acquisition of “additional properties” such as (but importantly not limited to) buy to let properties and second homes.

The additional rate will be three percentage points above the current rate of SDLT and will apply to purchases of residential properties for more than £40,000 when the acquisition completes on or after 1 April 2016.

Primarily, however, the measures are set against a wider policy context of trying to level the playing field between first time buyers and buy to let investors in support of home ownership. In this respect they follow measures announced in the July budget which restrict the tax relief on mortgage interest payments for those buy to let investors with debt set against their property.

This is likely to limit the ability of some investors to expand their existing portfolios or buy their first investment property and this will have an impact on developer sentiment.

In the short term, there is little doubt that some buy to let investors will bring forward their planned purchases to beat the April 2016 deadline. But for the remainder of the year and over the medium term we anticipate investor buyers to exercise an increased level of caution (even with the news they will now be able to offset the increase in stamp duty when they onward sell the property, as the increased stamp duty levy would be deemed part of their acquisition costs). This is likely to have an impact on sales and force developers to think about the type of product they are building.

New build market anecdotal evidence suggests that buy to let investors have historically been particularly active in new homes markets. So reduced demand from these buyers means that developers will be increasingly reliant on demand that is underpinned by other government initiatives such as Help to Buy, Starter Homes and, following the Autumn Statement, an expanded shared ownership sector.

From a developer's perspective much then depends on the extent to which demand from these different buyer groups is interchangeable. This will be dependent on the nature of the product they offer to the market and, where necessary, the ability of house builders and developers to alter their product offering.

Developers who are most able to adapt to the changing landscape, to adjust their product to place more emphasis on the demands of the owner occupier – the quality and location – are those mostly likely to stay ahead of the curve and best prepared for when the market levels out and the additional charges are fully priced into the market.

For more information, please contact: Kane Lennon, Savills Northwood Residential Development Sales: 01923 740082 klennon@savills.com