Are govt’s landlord tax chickens coming home to roost?
Countrywide index shows supply falling off and rents rising in the South as landlords buy fewer homes to rent.
When agents warned the government that its anti-landlord tax measures would lead to higher rents, they were dismissed as scaremongers.
But Countrywide’s latest rental index shows that the predictions weren’t far off the mark in London, the South and Scotland.
Rents in London were higher by 2.1% in July compared the last year driven by an 18% drop in properties available to rent, and the number of properties coming on to the market from landlords in the South has halved since 2015, helping drive the national average rental increase up from 1.1% to 2.2%.
And the rate at which new rental properties are coming on to the market is slowing across some parts of the UK; down 18% in London, -6% in the East of England and -5% in the South.
North vs South
But other parts of the UK are seeing a dramatic increase in the number of rental properties coming on to the market, including in Yorkshire & Humberside (+37%), Wales (+22%) and the North West (+21%) suggesting that landlords are shifting their investment focus away from London and the South.
The research may be good news for first time buyers. In London the proportion of homes being bought by landlords is at its lowest for seven years down to 10.5% from 20.9% in 2015.
But while the number of homes to rent remains the same or reduces in some parts of the UK as the landlord tax measures bite, tenant numbers in these areas have been rising, up 1% in London and 5% outside the capital.
“The rush to beat higher stamp duty rates in April 2016 caused a spike in the number of homes to rent, but that has now worked its way through the market,” says Johnny Morris, Research Director at Countrywide (pictured, right).
“The stock of homes to rent is now falling in the more expensive parts of the country because higher tax rates have dissuaded large numbers of landlords from buying. Ultimately this means fewer homes on the market and higher rents.
“Across the Midlands and the North, higher rates of stamp duty are much less of a disincentive to investors. Here the number of homes on the market remains up on last year, buoyed by investors living in London and the South East choosing to buy in the Midlands and the North.”
