Buy-to-let stamp duty fee hike will ‘push up rents’
A study by the Association of Residential Letting Agents (ARLA) found that six in ten members agree rents will be pushed up once the stamp duty reforms have come in to effect, as increased costs are passed through to tenants.
From 1 April, the government will add three percentage points to the existing Stamp Duty rates for those buying a second property.
That means a homeowner buying a second property for £150,000 before 1 April will pay £500 in Stamp Duty, but £5,000 after the deadline – a tenfold increase.
Over half of letting agents reported an uplift in interest from buyers looking to invest in buy-to-let properties before the stamp duty reforms come into effect. After the deadline, two thirds predict supply will fall as landlords are pushed out of the market.
ARLA managing director, David Cox, said: “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.”
He added: “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. The dream of home ownership will remain out of reach for many as we move closer towards becoming a nation of forever renters.”