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Stamp Duty to drive rents and cut supply
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
New research from the Association of Residential Letting Agents (ARLA) has suggested that the stamp duty reforms for buy-to-let properties will push rental prices up for tenants. In turn, the firm warns this will lead to a further decline in available properties.
Rise and fall
Data in the report from ARLA shows that 52% of letting agents recorded an increase in buyers looking to beat the deadline and invest in buy-to-let property. This represented a 47% increase from data recorded in January.
However, 63% of agents feel that once the deadline has passed, the supply of property will fall as landlords are slowly forced out of the market.
57% of ARLA members believe rents will rise after the stamp duty reforms come into force, with landlords pushing their increased costs through to tenants.
Impact
David Cox, managing director of ARLA, noted, ‘the stamp duty changes are now imminent and as well as hitting small landlord’s, they will also impact institutional investors. Although members are reporting a rush from landlords trying to snap up their buy-to-let investments now, it’s likely that we’ll see the buy-to-let market drop like a stone come April and probably not pick up again until next year. This will most certainly cause rents to increase, with supply dropping, as competition for the limited availability of properties intensifies.’[1]
Demand for buy-to-let properties rose by 19% during February, with around 37 prospective tenants registered per member branch. Interestingly, the supply of rental properties on agents’ books actually increased to 176 in February, rising from 172 in January.
Stamp Duty to drive rents and cut supply
Intensifying
‘The demand for housing continues to intensify as supply remains an issue across most of the country,’ Cox continued. ‘We are concerned that the government rhetoric of wanting to help people onto the housing ladder does not tally with their action of continuing to target the rental market with additional costs. Some landlords will simply withdraw from the market whereas others who can take the hit of the extra stamp duty will simply raise rents to cover the extra costs.’[1]
‘The dream of home ownership will remain out of reach for many as we move closer towards becoming a nation of forever renters,’ he concluded.[1]
[1] http://www.propertyreporter.co.uk/landlords/arla-landlord-stamp-duty-will-see-btl-market-dr0p-like-a-stone.html
