Investors won’t be stamped out - How the rental market bounced back from 2015’s shock 3% buy-to-let stamp duty
Investors won’t be stamped out - How the rental market bounced back from 2015’s shock 3% buy-to-let stamp duty.
It’s four years since an extra 3% stamp duty hammered buy-to-let properties. While many experts predicted higher rents and unhappy tenants, Property Investor Market’s (https://propertyinvestormarket.com/) new research reveals the sector bounced back with 84,000 new landlords, a 22% increase in rental properties - and a 29% increase in tenant satisfaction.
It’s almost four years since then Chancellor George Osbourne unveiled his controversial 3% stamp duty surcharge on buy-to-lets and holiday homes. Aspiring investors planning to get a first foot on the property investment ladder were left reeling by November 2015’s Autumn Statement announcement, and Property Investor Market (https://propertyinvestormarket.com/) says the new duty could easily have created a dramatic reduction in the number of new buy-to-lets available.
But, in an unexpected turnaround, Property Investor Market’s MD, Ross Kelly, says its new industry study (https://propertyinvestormarket.com/real-estate/stamped-out-how-the-rental-market-bounced-back-from-the-shock-3-buy-to-let-stamp-duty/) reveals the number of rental properties has, in fact, soared by 1.15 million, and 84,000 new landlords entered the rental property sector since 2015. ‘Our new report reveals it takes more than a shock stamp duty to stamp down the growth in the property rental market.’ says Ross.
Reveals Ross: ‘This was a particularly nasty tax that imposed a swingeing 3% onto the entire purchase price of a buy-to-let property costing over £40,000. The 3% additional duty is tiered, like residential stamp duty rates and income tax. But, far from discouraging future investors, our research reveals the new duty seemed to have focussed the property investment market. Prior to the new stamp duty there’s no doubt there were some landlords who stretched all their funds to buy a second, or even third, property. Working on such tight margins there was often little left in the kitty to cope with sudden emergencies at these properties – or even regular maintenance.’
Adds Ross: ‘Government figures from 2015 showed just 65% of private renters were satisfied with their accommodation. Today a vastly improved 84% of private renters are happy with their rental property. The new tax, it seems, winnowed out a number of fly-by-night landlords, whose main aim was a very quick turnaround on a relatively small capital spend.’
And Ross says it’s not only tenants that seem to have benefitted from George Osbourne’s tax bombshell. ‘Investors themselves have overcome the new stamp duty burden and, indeed, the rental market has boomed since the imposition of the new tax. In 2015, 4.3 million properties were rented privately; today 5.45 million homes are buy-to-lets or shared houses: a 22.4% increase in rental stock.’
And Ross reveals that, despite the new charge, it is first-time landlords that are leading the drive for new affordable rental homes. ‘Our report shows that back in 2014 there were 1.75 million UK landlords. Today there are 2.59 million; a 38% increase. Keep in mind these are likely to be serious investors, undeterred by the new tax and happy to play a longer game, in order to potentially reap the benefits of the property market over time. It really seems the new stamp duty failed to stamp out enthusiasm for the rental property investment sector.’
You can read the full study of the impact of the 3% stamp duty surcharge on rental and second homes at https://propertyinvestormarket.com/real-estate/stamped-out-how-the-rental-market-bounced-back-from-the-shock-3-buy-to-l