UK house prices rise in November as buy-to-let investors flood market

UK first-time home buyers face fierce competition from buy-to-let investors over coming months, according to a report on Tuesday.

The market has been flooded with buy-to-let investors ahead of a 3% stamp duty surcharge which is effective from 1 April 2016, Haart said.

In November, house prices rose 13.4% annually and 3.7% on the month to reach an average of £231,857. The gain was driven by London house prices which rose 3.4% in November compared to October and 12.3% compared to a year ago to an average of £525,780.

Haart chief executive Paul Smith said the UK experienced the steepest monthly and annual increase on record following a surge in registrations from buy-to-let investors since the Autumn Statement announced higher stamp duty charges in the new year. The stamp duty could mean the amount on a property worth £275,000 could rise from £3,750 to £12,000, Smith noted.

“Although first-time buyer house prices have remained relatively stable, up just 1.1% in the last month, I expect these to shoot up over the coming months as first-time buyers face fierce competition from buy-to-let investors," he said.

“The pressure is already being felt by many with demand among first-time-buyers already down 7% in the last month alone. While first-time buyers may face a tough couple of months, once the stamp duty changes come into effect in April, demand from buy-to-let investors is likely to recede so we should see a recovery in prices at this level.”