Countrywide plc Monthly Lettings Index – March 2017

Press Office

Tuesday, April 18, 2017

One in five homes let, owned by a company landlord – a record high

The proportion of homes let by a company landlord reached 20% in Q1 2017, the highest proportion since records began in 2010 (table 1).  The numbers have been steadily rising since 2013 but Q1 2017 recorded the biggest annual jump (6%).  Changes to tax relief on rental properties, announced in the 2015 Spring Budget may be behind the rise. 

The changes to income tax relief on mortgage interest payments are being phased in over a four year period (until 2020) and took effect from this month (6 April 2017).  They make it more tax efficient in some cases for landlords to own their buy to let portfolios through a company rather than hold as a personal asset.  (see notes to editors)

Landlords letting homes in London are most likely to own their property using a company name.  27% of properties let in London are owned by a company, a larger proportion than anywhere else (table 2).  Company landlord lets drive the top and bottom of the rental market with the most and least expensive homes likely to be owned by a company landlord.  Over the last year, a quarter of homes let by a company landlord cost less than £500 per calendar month (pcm) (table 3). Nearly one in ten homes (9%) let for between £1500 and £2000 pcm were owned by a company landlord, compared to 6% owned by non-company landlords.

Rents fell in March 2017, the cost of a new let was 0.3% lower than in the same month last year, the second consecutive monthly fall.  The average rent of a new let in Great Britain fell to £928, £3 less than the same period last year.  The fall in rental growth was driven by London, the South West and Wales where rents fell by 0.4%, 0.2% and 6% respectively (table 4).

Commenting Johnny Morris, Research Director at Countrywide, said:

“The number of rented homes owned through a company is on the up. The incoming tapering of mortgage tax relief is likely driving the increase.  Companies are generally taxed more favourably, particularly with recent changes by government to tax relief, so in many cases landlords can make cash savings by operating through a company rather than as an individual.

 “Rents fell again in March, mostly driven by falls in London.  Stock growth continues to outpace demand in the capital, giving tenants more negotiating power, pushing down rents.  In much of the rest of the UK rents continued to grow, although at a slower rate.”

Ends

Table 1 – Proportion of homes let by a company landlord

 Table 2 – Proportion of homes let by a company landlord by region - January 2016 – March 2017

 Table 3 – Proportion of lets by price band - January 2016 – March 2017

 Table 4 – New lets

For further information please contact: 

Countrywide plc

Group Press Office

Tel: +44 (0) 7721 439043

Email: press.office@countrywide.co.uk
Visit: www.countrywide.co.uk                                  

Notes to Editors:

Changes to Tax Relief on Buy to Let Mortgage Payments

Changes to tax relief on buy to let mortgage interest payments were announced by the former Chancellor George Osbourne in the Spring Budget of 2015 but came into effect (phased in) from 6 April 2017.  Under the changes, the amount of tax relief landlords are able to claim will be reduced (tapered in over a four year period to 2020) to the basic tax rate of 20%.

Landlords with a highly mortgaged property portfolio (ie owners of several buy to let properties) are

most affected by these changes.  Companies are generally taxed more favourably which means that landlords can typically save more by holding their buy to let properties in a company rather than as an individual.

About the Countrywide Lettings Index

The Countrywide Lettings Index uses data from Great Britain's largest letting agent to track changes to the cost of renting.  The index is based on the 90,000 homes let and managed by Countrywide in each year, adjusting for their location and type.  It is based on achieved rather than advertised rents and the published monthly rental figures are an average of the new lets and renewals of tenancies in that month.

About Countrywide plc

Countrywide operates across the residential and commercial sectors and has the largest estate agency and lettings network in the UK. Last year, the Group:

 

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