Buy-to-let investors have returned to the property market, following the post-Stamp Duty deadline lull in April, according to Rightmove.
The property portal’s Rental Trends Tracker for the third quarter (Q3) of the year found that buyer enquiries from potential landlords and buy-to-let investors were up by 30% on May, following a short-
Buy-to-Let Investors Return to the Property Market
term dip after the 3% Stamp Duty surcharge for second homes was introduced on 1st April.
New rental listings on Rightmove were 6% higher in Q3 than the same period of 2015, found the report.
In addition, the research revealed that the average rent is up by 0.5% on a quarterly basis, and 3.2% on the year, to stand at £779 per month. This is down from quarterly growth of 2.7% and a yearly rise of 4.1% in Q2.
Rents continue to drop in London, by 0.7% on Q2 and 1.5% annually, to an average of £1,885 a month.
The most in-demand area outside of London for rental properties was Ashton-Under-Lyne in Greater Manchester, where the average rent on a two-bedroom property was £524 per month. This was followed by Wellingborough in Northamptonshire, where the typical rent stands at £660.
Rightmove also analysed the returns that landlords making last-minute purchases before 1st April would have received, by looking at capital price growth and average rent prices since the Stamp Duty changes.
The best returns for buy-to-let investors were found in Southend, Essex, where house prices rose from £187,515 in Q1 to £210,353 in Q3, and the average rent was £4,816, giving a total return on investment of 14.7%.
In London, the highest returns were found in East Croydon (13.8%) and Greenford (13.4%).
The Head of Lettings at Rightmove, Sam Mitchell, comments: “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.”
She adds: “New rental supply has held up, despite concerns that the Stamp Duty changes would lead to less fresh stock.”
Have you purchased a buy-to-let property since the Stamp Duty change was introduced?