Extra stamp duty set to reduce number of lettings in UK, say agents
The extra stamp duty charge for the buy to let sector that begins next April has triggered a less optimistic outlook among letting agents in the UK.
Some 40% are predicting that rental supply will decrease over the next five years, the highest rate this year, according to the latest report from the Association of Residential Letting Agents (ARLA).
‘This month’s findings are triggered the Chancellor’s announcements around buy to let tax in his Autumn Statement. We said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country,’ said David Cox, ARLA managing director.
‘The new stamp duty increases will make owning a buy to let property unprofitable for a lot of landlords, and certainly make new investors think twice about purchasing a buy to let,’ he added.
The ARLA monthly report also shows that tenants experiencing rent increases continue to fall, with 23% of letting agents reporting rent increases for tenants in November, down from 25% in October and the lowest in 2015 so far.
Demand for rental properties increased marginally in November, alongside supply of available housing which was likely a result of tenants preparing themselves to find new rental properties in the New Year. ARLA agents registered an average of 34 new tenants per branch this month, up from 33 in October.
Supply of rental accommodation also increased in November, rising by 9% from an average of 173 properties managed per branch in October, to 189 this month. However, renters in the capital will still struggle to find a property, with only 121 properties managed per branch, some 36% less than the UK average.
‘It’s promising to see that the number of agents reporting rent increases is continuing to decline, and this should spread some Christmas cheer amongst renters renewing tenancies or looking for a new property to rent,’ said Cox.
‘However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016,’ he added.