29 April 2019
RENTAL INDEX: As Stamp Duty Costs Rise – Investors Head Northwards
As the average stamp duty bill for an investor buying in London is now £11,760 more compared to pre-stamp duty changes (Q1 2016), it is only £3,910 higher for an investor purchasing outside London. So how much has this new taxation law driven the changes we’re seeing in London-based landlords investing in properties outside the capital?
LATEST INVESTMENT SOUNDBITES:
- Recent figures show that almost three fifths (59%) of London-based landlords purchased their buy-to-let properties outside the capital during the last 12 months, an increase from just a quarter 9 years go (25% in 2010).
- Infact, 34% of London-based investors bought buy-to-lets in the Midlands and North during the last 12 months, up from just 14% in 2015 and 4% in 2010.
- A landlord buying in London during the last 12 months faced a £24,600 stamp duty bill on average, compared to £5,330 for an investor buying outside the capital.
- Rents in Great Britain increased 1.9% year-on-year in March, driven by a 3.7% rise in Greater London where rents hit a record high.
Nearly three in five (59%) London-based (i.e. living in London) landlords purchased their buy-to-let property outside the capital during the last 12 months (Chart 1). Historically, London landlords bought their investment properties near where they lived. In 2010 just one in four (25%) London-based landlords purchased their buy-to-let outside the capital, with 75% investing in London.
CHART 1: Proportion of London-based landlords purchasing buy-to-lets outside the capital
However, due to high house price growth and a clampdown on landlord taxation, more London-based landlords have chosen to invest further afield in search of higher yields and lower stamp duty bills. The proportion of London-based investors purchasing buy-to-lets in their home region has fallen 17% since 2015 (before the stamp duty surcharge on second home purchases was introduced in April 2016)
To view the FULL RENTAL INDEX which shows: the post popular regions and local authorities that London-based landlords are focusing their investments on, plus the latest rental growth statistics UK-wide please click below: