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Landlords’ stamp duty rush pushes buy-to-let sales to four-year high

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Written by: Lana Clements
14/12/2020
Landlords made up 15% of all sales agreed in November, the highest figure since December 2016.

Investors in agreed sales from the last three months stand to save a collective £74m in stamp duty, as they race to beat the 31 March deadline, according to analysis by Hamptons.

More than half of these purchases were in cash, with landlords snapping up around 134,000 homes, the estate agent found.

The typical investor who fails to complete before April would see their stamp duty bill rise from £5,400 to £6,500.

The average price paid by a landlord in November was £180,000 – around £80,000 less than that paid by an owner-occupier.

Regional rush

The rush has been concentrated in the Midlands and the North with more than one in five, or 22%, of all homes sold in the West Midlands bought by an investor.

By local authority, a whopping 70% of all sales agreed in Blackpool were hoovered up by an investor, in Nottingham 35% of all sales were by landlords.

It comes as nationally rents grew 3% in November, with all nine regions in England registering a steeper increase between October and November.

Tenants in London paying more for the first time since March, with growth edging up by 0.3%.

The average home in inner London now costs 12.7% less to rent than it did in November, however, in outer London rents are 3.8% higher.

Rents in Wales fell 3.4%, marking the third consecutive month of declines.   

Aneisha Beveridge, head of research at Hamptons, said: “Just like in the months leading up to the introduction of the 3% second home surcharge back in 2016, landlords have rushed to take advantage of reduced stamp duty bills. But the difference between today and 2016 is that the stamp duty cliff edge is around five times smaller, meaning the financial impact of missing the deadline is reduced.

“With over half of investor purchases made in cash during November, those taking advantage of the holiday are disproportionately larger investors expanding portfolios rather than new investors starting out. And with landlords also making up a rising proportion of sellers, in many cases, larger landlords are buying homes from smaller landlords.

“The rental market has shown signs that it is shaking off its Covid-induced hangover with rents rising in every region of England for the first time since March. With nearly a fifth fewer new rental homes coming onto the market than last year, it has put upward pressure on the recovery in rental growth. It is, however, likely that the homes being bought by landlords now will hit the rental market early next year which could serve to stifle rental growth in 2021.”

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