The Chancellor’s clampdown on buy-to-let investment is already beginning to show signs of working, according to new research conducted by Rightmove.
Data released by the property website suggests that more properties have become available to first-time buyers, with prices also slowing. The firm suggests that there has been a 6.6% rise in two-bed flats, popular with this group, over the past year.
Availability
Two-bed flat availability is now at its greatest since 2007, according to the firm. In addition, their research suggests that buy-to-let landlords may be looking to sell their property before changes in tax relief and stamp duty come into effect.
‘With the monthly price increase in this sector at a near standstill, this suggests that some of the dynamics of the changing tax regime for buy-to-let investors are starting to play out sooner than expected,’ said Miles Shipside, director of Rightmove.[1]
‘For several years buy-to-let investors have been enticed by high tenant demand and attractive returns,’ he continued, before saying, ‘as their window of opportunity starts to close it already appears to be opening wider for first-time buyers.’[1]
Buy-to-let clampdown beginning to work?
Changes
During the summer, Chancellor Osborne slashed tax reliefs for buy-to-let landlords and went on to increase stamp duty on investment and ‘second’ homes in the Autumn Statement.
Prices in the mainstream market continued to rise, with Rightmove’s data suggesting the cost of a property coming to market was up by 0.5% in January, in comparison to December. In addition, demand on the Rightmove website in the first week of 2016 was up by 21% on the same period in 2015.
However, there was little in the way of relief for struggling tenants, with separate analysis by Countrywide suggesting rents rose by 3.1% in 2015. Company research director Johnny Morris said that, ‘2016 looks to be a complicated year for landlords,’ with the, ‘additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behaviour.’[1]
‘With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents although any rises will be tempered by affordability pressures,’ Morris added.[1]
[1] http://www.theguardian.com/business/2016/jan/18/jump-two-bed-flats-for-sale-landlords-selling-up?CMP=share_btn_tw