Monday, May 16, 2016
Landlords target cheaper properties in response to new 3% stamp duty charge
The latest Countrywide Lettings Index shows how landlords are changing their purchasing habits in response to the new 3% stamp duty charge for investors introduced in April 2016. Landlords are targeting cheaper homes to buy, to try and offset the 3% increase in purchasing costs. The average house price paid by landlords fell 8.3% month-on-month in April. On average investors paid £178,000 for a home in April 2016, compared to £194,000 last month and £188,000 in April 2015.
London saw the biggest fall in average price paid, falling from £436,000 in March to £365,000 inApril. 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. 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 1st 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. 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 2.0% over the last year, leaving the average monthly UK rent at £932. Rental growth is now half the rate it was in 2015. Affordability constraints and the increase in the number of homes coming onto the rental market continues to slow rental growth.
Commenting, Johnny Morris, Research Director at Countrywide, said:
“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.
“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.”
The Countrywide Lettings Index for May will be released on Friday 10 May 2016 under embargo for publication on Monday 13 May
Table 1: Change in average price paid by landlords purchasing homes in April 2016
Table 2 – Rental prices for new lets
Table 3 – Rental prices for renewed contracts
Table 4 – Rental prices for all occupied units
To find out more, please contact:
Group Press Office
Tel: +44 (0) 7721 439043
We will process your enquiry as soon as possible.
Thank you for your application, we are currently in the process of screening all applications. Unfortunately if you do not hear from us within 14 days your application has not been successful on this occasion. Thanks for your interest in Countrywide Conveyancing Services.
Please note for all our roles, successful candidates will be subject to the following checks:
There seemed to be an error processing your enquiry, please try again later.