Extent of surge in BTL activity in March revealed

New figures from Countrywide have revealed the monetary extent of the surge in buy-to-let investment ahead of the stamp duty surcharge deadline.

The firm said that £28bn worth of sales were completed last month, a rise of 76% in comparison to the previous year.

Increases

Countrywide assessed the entire market and noted that landlords made up 23% of all home sales completed in March. This was compared to 13% at the same period in 2015. What’s more, in the two weeks running up to the deadline, over half of all property transactions were completed by landlords.

This rise in landlord business demonstrates that additional housing is being made available for tenants to rent. 22% more rental properties were on the market in the first quarter of 2016t than in the same period last year, contributing to lower rental growth.

However, this percentage increase in the number of homes to rent has not been followed by the increase in tenants looking for a home, putting increased pressure on rents. The total number of tenants registering their interest in rental property was up 16% in the first three months of 2016, in comparison for the same period in 2015.

Regional Rises

By region, London saw the biggest increase in newly rented properties, with numbers up by 40% on the first quarter twelve months ago. This said, London actually has a lower growth of tenant numbers, up by just 8% in the same period.

As a result, there has been a rapid deceleration in rental price growth, with rents in Greater London growing by 2.9% in March, as opposed to the 7.4% recorded a year ago.

The average rent in the UK increased by 3.4% in the year to March 2016, with rents accelerating quickest in the East of England, rising by 8.5%. This growth was driven by larger numbers of new tenants registering during the first quarter of 2016, with 34% the highest increase seen in any region.

Temporary Effect

Johnny Morris, research director at Countrywide, noted that, ‘quite at odds with the intentions of the policy, the first measurable effect of the introduction of the new stamp duty rate has been to increase the number of homes owned by landlords, although this will likely be a temporary effect as we see reduced investor activity in future months.’[1]

‘The increase in supply of homes to rent from landlords bringing forward purchases seems to have taken the edge off rental growth. A similar increase in tenants looking for a home to rent though would indicate this may not persist. The large number of sharers and people living with parents means there is a big store of pent up demand in the rental market,’ Morris concluded.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/half-of-homes-sold-in-late-march-were-for-buy-to-let–countrywide