Buy-to-let landlords who surged to purchase property before the Stamp Duty deadline are now beginning to rent them out, according to new data released by Rightmove.
The property portal reports that there was a rise of 8% in the volume of rental properties listed during the second quarter of the year, in comparison to the same period in 2015.
London saw the largest increase in rental property supply, which was up by 22% on last year’s results. Asking rents dipped by 1.1% as a result, to stand at just under £2,000 per month.
Overall, rents increased by 2.8% in the second quarter of 2016, outside of London, in England and Wales. This was only 0.1% greater than 12 months previously.
In the East of England, the increase of 5% recorded was the highest of all regions year-on-year. By quarter, the South East lead the way, with rents up by 5.1%.
Head of letting at Rightmove, Sam Mitchell, noted, ‘the big spike in March transactions resulting from a large number of investors beating the more punitive stamp duty tax deadline has created a rental supply boost which is good news for prospective tenants actively looking for a new place to live. Now that the stamp duty changes have come in this boost may be short-lived, as landlords consider whether or not to make further purchases.’
However, Mitchell went on to note there could be fewer investors looking to take out landlord insurance in the coming months. He observes, ‘once the tax relief changes start to be phased in from next year new buy-to-let activity could slow further. However, rental demand is still outstripping supply in many areas of the country so we may see a shift by investors to look in areas that offer better yields for long-term property investments.’
Landlords looking to add to their portfolios may want to look at some of the areas with the greatest tenant demand.
Greater Manchester boasts three of the top five areas in terms of demand, namely Ashton-Under-Lyne, Stalybridge and Oldham. Average asking rents for a standard two-bedroom property here cost around £520 per month. In terms of purchasing, landlords can expect to fork out around £100,000.
‘Mr Mitchell concluded by saying, ‘Whilst it’s too early to speculate or predict any long term impact of Brexit for the rental market, these latest figures show that it’s business as usual for tenants looking for a place to rent. Naturally we saw a dip in demand the three days after the referendum result, but that soon returned to usual levels of searching. If confidence in buying houses does falter it could lead to more people looking to rent, perhaps in the short-term, and that would mean that rents could rise further.’