This is Money are reporting that the recent holiday in Stamp Duty (SDLT) resulted in buy-to-let landlords coming into the market, but not in the numbers as was originally feared.
The article can be seen here, and says:
Britain’s landlords did not embrace the stamp duty holiday with fervour as feared, new research suggests.
The share of homes going to property investors edged up slightly, but not to the degree that some had suggested it would in a forecast rush to take advantage of lower tax rates.
In fact, buy-to-let investors completed tens of thousands fewer transactions than they did during a similar 15-month period in 2016 ahead of the extra 3 per cent surcharge on second and investment homes coming in, despite similar tax savings on offer.
The share of properties bought by landlords in the run-up to the tax holiday, which started in July 2020, was 11 per cent – and rose to 12 per cent during it, according to estate agent Hamptons International.
This was despite rents rising at their fastest pace for more than a decade in the year to July.
There were a total of 215,000 investor purchases across Britain between July 2020 and September 2021.
This was below the 242,400 purchases which were made during the 15-month run up to the introduction of the 3 per cent stamp duty surcharge for landlords on 1 April 2016.
During the stamp duty holiday, the average landlord who did buy a property saved £3,000, the equivalent of around three months’ rent and a 35 per cent reduction on their £8,500 average tax bill before July 2020.
Average bills are set to return to around £8,400 from 1 October 2021, just below what investors were paying on the eve of the stamp duty holiday.
The figures suggest landlords were not willing to outbid home buyers as house prices continued to rocket.
This may have been a result of increasing taxes and regulations on landlords over the past few years, which started with the introduction of the 3 per cent surcharge in 2016.
At the time, many landlords bought up properties beforehand to get in under the wire.
As well as the standard stamp duty bill, buy-to-let investors and anyone buying a second home must pay a 3 per cent surcharge on top of the standard rates for owner-occupiers.
In the run-up to that policy being introduced, the proportion of home sales made up by landlords in Britain was much higher at 17 per cent, according to Hamptons.
The deeply unpopular surcharge is often cited by landlords as a reason for not expanding their portfolio, or even quitting the market altogether.
Landlords bought up more homes ahead of the introduction of new taxes on buy-to-let in 2016, than they did during the stamp duty holiday over the past 15 months
Overall, the stamp duty holiday meant that the average investor paid less in stamp duty than at any time since April 2016, when the 3 per cent stamp duty surcharge was introduced.
Despite this, the average bill during the holiday remained twice the level it was before the surcharge was introduced.
What about those landlords who did buy?
There is little indication that landlords who did buy properties during the stamp duty holiday took advantage of the saving to buy bigger properties in more expensive areas.
Instead, 83 per cent of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers.
During the holiday the average price paid by a landlord rose by just 1 per cent to £181,000, despite wider house price growth of 10 per cent over the same period.
According to the September House Price Index from Nationwide, £22,613 has been added to the cost of the average home in just a year, with the average price of a home increasing 10 per cent to £248,742.
Commenting Aneisha Beveridge, head of research at Hamptons, said: ‘The overall impact of the stamp duty holiday on investor activity has been relatively muted.
‘The holiday resulted in a small uplift in the number of new buy-to-let investors, but despite their reduced bills, they were not outbidding owner-occupiers on any significant scale.’
What is happening to rents?
Average rental growth across Britain hit 8 per cent in September, the third fastest annual rate of growth recorded this year, according to Hamptons.
Regions in the South of England, but outside of London, led the way.
The South West saw the highest rent increases in the past year, reaching £1,011
The average rent on a new home rose 14.8 per cent to £1,011 in the South West, 14.7 per cent to £1,252 in the South East and 10.8 per cent to £1,106 in the East of England.
September marked the sixth consecutive month where annual rental growth hit double figures in the South West.
The region has benefited from people relocating away from cities during the pandemic, as well as an increased appetite for longer-term holiday lets.
London rents have also continued to recover.
Although Inner London was the only region in the UK to see a decline in rents year-on-year, the 4.4 per cent or £100 year-on-year fall was far smaller than the 22.1 per cent decrease recorded in April when the market bottomed out.
In Outer London, rents grew 3.2 per cent annually in September, rising for the thirteenth consecutive month. This kept Greater London rents overall in positive territory, up 1.8 per cent year-on-year.
Beveridge added: ‘While rental growth rates typically peak over the summer months, this year they have continued to rise into the autumn.
‘This means average monthly rents have passed £1,100 for the first time nationally, led by big increases on larger homes.
‘The average four-bed home now costs 120 per cent more than a one-bed, up from 95 per cent pre-pandemic.
‘While we are expecting this growth to moderate in the final few months of the year, it is likely 2021 will mark some of the fastest rates of rental growth in a generation.’
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