The stamp duty holiday failed to create a buy-to-let spending spree despite landlord stamp duty bills falling by more than a third, says Hamptons.
Investors bought 12% of homes sold in Great Britain during the 15-month tax break, up from an average of 11% during the 12 months before the holiday, but far from the 17% recorded in Q4 2015 – the run up to the introduction of the 3% stamp duty surcharge on 1st April 2016. Investors made 215,000 purchases between July 2020 and September 2021, up from 164,300 during the same period in 2018/19, however, this was 11% fewer than the 242,000 made before the 3% surcharge came in.
Hamptons Monthly Letting Index reports that the holiday meant the average investor paid less in stamp duty than at any time since April 2016, but their average bill remained twice the level it was before the surcharge was introduced, which partly explained why there hasn’t been as much of an increase in investor purchases this time around.
Significantly smaller savings
Hamptons reports that 83% of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers. Investors have been less sensitive to the change in the nil-rate stamp duty threshold since they tend to buy cheaper properties.
In September, rents across Great Britain rose 8% year-on-year, meaning that the average rent now stands at £1,109 pcm. Aneisha Beveridge, Hamptons head of research, says that while rental growth rates typically peak over the summer months, this year they have continued to rise into the autumn. She adds: “This means average monthly rents have passed £1,100 for the first time nationally, led by big increases on larger homes. While we are expecting this growth to moderate in the final few months of the year, it is likely 2021 will mark some of the fastest rates of rental growth in a generation.”