UK landlords looking for cheaper properties due to stamp duty surcharge

Taylor Scott International News

Landlords in the UK are looking for cheaper properties in response to the new 3% stamp duty charge on additional homes, according to the latest lettings index to be published. Average price paid by investors in April fell by 8.3% month on month, from £194,000 to 178,000 and London saw the biggest change in behaviour with landlords buying homes costing 16.4% less than the previous month. At the same time, the number of homes sold to first time buyers increased by 19% between April 2015 and April 2015, while the number of homes bought by landlords halved, the data from the Countrywide Lettings index shows. It also reveals that average UK rental growth continued to slow. The rise of 2% in April was less than half the 4.7% recorded in April 2015. London saw the biggest fall in average price paid, down from £436,000 in March to £365,000 in April. While overall house prices in London rose 13.9% over the last year, the capital’s landlords paid an average of 8.2% less than they did in April 2015. However, generally lower priced markets saw a less marked response from landlords with average prices paid by investors rising month on month in the North East and Yorkshire. April also saw fewer landlords purchasing homes, after a spike in activity in the first three months of the year. Landlords rushed to complete on their purchases before 01 April to avoid a bigger stamp duty bill with 61% more landlords buying in the first quarter of 2016 compared to the first quarter of 2015. The report points out that many sales which would otherwise have normally completed in April were pulled forward into March. Around half the number of landlords bought in April 2016 compared to April 2015. The number of sales to first time buyers rose by 19% over the same period. Average rents increased 2% over the last year, leaving the average monthly UK rent at £932. Rental growth is now half the rate it was in 2015 and the report suggests that affordability constraints and the increase in the number of homes coming onto the rental market continues to slow rental growth. ‘April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3% charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill,’ said Johnny Morris, research director at Countrywide. ‘There’s early signs that first time buyer numbers are increasing in as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend,’ he added. Taylor Scott International

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