Buy-to-let has bounced back since the Brexit vote as the UK property sector fights back against government efforts to rein it in, new figures reveal. Rising numbers of properties are being listed online for rent amid growing purchase enquiries from potential buy-to-let investors, research has found.
Rightmove, the leading property website, told the Financial Times (FT) that rental listings had risen by 6 per cent in the three months following the Brexit vote, to the end of September, this in comparison to the same period last year. This much-needed rise in the supply of rentals is even higher in the Capital where it climbed 15 per cent year-to-date.
This rapid increase in supply, it would seem, is a result of the rush to buy ahead of the 3% stamp duty premium imposed on all second property purchases in April, a period when sales of buy-to-let mortgages really took off. Rightmove told the FT that buy-to-let purchases since then had also recovered strongly, with purchasing inquiries and listings by investors on the property website up 30 per cent since May.
Sam Mitchell, Rightmove head of lettings, has said:
“Investor activity has bounced back following the stamp duty changes, though some agents report that many investors are looking to knock sellers down on their asking prices to make up for the additional stamp duty they now need to pay. New rental supply has held up despite concerns that the stamp duty changes would lead to less fresh stock.”
The resumption of growth in the sector defies the stringent new rules and tax measures introduced in 2015 by the government which were generally expected to slow the growth of the landlord buy-to-let market.
Last summer the then Chancellor, George Osborne, introduced measures which prevent landlords claiming mortgage interest relief as an expense against rental profits, reducing on a sliding scale over 4 years to a 20% tax credit. In addition a 10 per cent annual “wear and tear” allowance, a convenient expense allowance previously enjoyed by landlords, was replaced by a like for like replacement allowance on furnishings only. In addition, the Bank of England has imposed stricter lending criteria on first-time buy-to-let mortgage borrowers.
Mr Mitchell told the FT:
“The changes starting in 2017 to lessen mortgage interest tax relief may see some seriously review their businesses and [they] could scale back, though there appear to be no signs yet of landlords exiting the market.”
Following the Rightmove research, figures obtained showed that rents were slightly up across the UK over the July to September period and Brian Murphy, head of lending for broker Mortgage Advice Bureau, told the FT that the Rightmove data would make “reassuring reading” for buy-to-let landlord investors and those considering investing in buy-to-let for the first time.
This data “…would suggest that the buy-to-let sector will remain stable, and providing that the current levels of stock and supply continues, for many landlords and investors both capital growth and rental incomes would appear to be maintaining strong momentum,” said Mr Murphy.
Brexit Vote Does Not Dim Buy-to-Let https://t.co/I8Iywli2jh
— LandlordZONE (@LandlordZONE) October 18, 2016