Landlords appear to be ignoring the Government’s latest tax rises, according to new data suggesting buy-to-let investors now account for a larger share of property purchases than before the Chancellor’s latest reforms.
The analysis, conducted by the Hamptons real estate agency on transaction data from its parent company, Countrywide, shows that landlords were responsible for 10.7% of offers accepted in Great Britain in November this year – up from the 2024 year-to-date average of 10.2%. . These findings challenge warnings that the new stamp duty surcharge would prevent investors from expanding their portfolios.
Chancellor Rachel Reeves’ Autumn Statement last month raised the stamp duty surcharge on second home purchases and buy-to-let purchases by two percentage points to 5%. This means that an investor who buys a property worth £500,000 now faces an additional tax bill of £37,500, an increase of £10,000 on the previous rate.
Industry groups feared the move would lead to a significant decline in buy-to-let activity, further restricting the already limited supply of rented homes in Britain. However, so far, the response from landlords has not matched those bleak forecasts.
“Early signs are that the new owners have shown relative resilience in the face of another cost increase,” said Anisha Beveridge, head of research at The Hamptons. “While the number of buy-to-let transactions remains low by historical standards, their numbers have not collapsed.”
The latest figures contradict the long-term trend of contraction Buy to let Participation since the wave of tax reforms targeting landlords began in 2016. In 2015, private investors owned 16% of all properties in the UK. According to Hamptons, that number is now much lower and is likely to end the year at around 113,630 new buy-to-let transactions – 40% fewer than eight years ago.
However, the resilience of this sector is evident across regions. In the more affordable Northeast, landlords accounted for 18.4% of purchases in November. However, London, which is often seen as a difficult market for landlords due to high prices and low rental yields, still sees 14.7% of its transactions by property investors.
At the same time, rising rental costs – an increasing burden on renters in Britain in recent years – appear to be subsiding. Average rent growth slowed to 2.6% year-on-year in November, taking the average monthly rent across Britain to £1,382. This steady pace provides some relief to renters, who have faced sharp increases in the wake of the pandemic.
The National Residential Landlords Association (NRLA) says a decline in the number of landlords since 2016 has contributed to renters’ struggles. The group points to official data showing 7,130 families needed council homelessness support between April and June 2024 – up from 5,400 between October and December 2023.
For now, the initial market response to the recent tax increase suggests that landlords, although more selective in their purchases, are not ready to exit the sector en masse. Instead, they appear to be recalibrating strategies, targeting areas where yields remain attractive and absorbing the additional tax burden rather than abandoning the buy-to-let market altogether.
Comments are closed, but trackbacks and pingbacks are open.