A RAPID fall in the number of landlords and soaring rent prices follows the introduction of stamp duty and tax reforms on buy-to-let properties in 2016.
Here we take a look at the facts and figures as to why it has had an impact on the housing market.
Why was stamp duty introduced?
Stamp Duty changes to buy-to-let properties were brought in to stop landlords pricing first-time buyers out of parts of the housing market.
The former Chancellor George Osborne introduced a second home surcharge in April 2016 as well as tax relief cuts for landlords.
It hit the investment appetite of the so-called amateur landlords who primarily earn their living from another career, but rent out between 1 and 3 properties.
How has stamp duty and tax reforms affected landlords?
The number of landlords has fallen by 120,000 in less than three years since stamp duty reforms were introduced, the Times by Hamptons International reports.
According to figures from HMRC, 15,805 more homes have been sold in comparison to the same time in 2015 after the government reforms begin to take affect particularly relating to the tapering of the interest rate reliefs. The three per cent tax on buy-to-let purchases has scared off landlords investing further.
Where are landlords selling their homes?
9.9 per cent of homes in London in November were bought by landlords in comparison to 16.9 per cent in 2015.
While nationally there was a difference of 3.1 per cent between then and now.
Rents have risen by an average of 16 per cent since 2011, with critics blaming it on the shortage of landlords who either sold off their rental properties or put up prices to cover costs.
Managing Director of Visionary Finance Hiten Ganatra said: “The Government’s changes in 2016 and 2017 squeezed the rental market in terms of available housing.
“Landlords with a large portfolio may be able to reduce their tax burden, but those with only a few properties may be forced to sell up because of very small profit margins.
“Now tenants are losing out as they try to secure rental properties in an ever-decreasing market pool and are forced to pay higher rents too when they do find somewhere.”
- Visionary Finance is a fee free mortgage broker based in London and Milton Keynes. Give us a call on 01908 465100 to speak with a member of our experienced team.