Rents continue to rise despite Osborne’s buy-to-let assault
Wednesday 23 March 2016
Despite all hopes the 2016 budget confirmed what many landlords feared – no back-down by George Osborne over his plans to penalise buy-to-let with a stamp duty hike and a cut to mortgage interest relief.
Indeed, Mr Osborne sent another missile soaring over private landlords’ heads by excluding them from an eight per cent cut in capital gains tax.
From 1st April landlords buying a buy-to-let or second home property for more than £40,000 will pay stamp duty at a rate three percentage points higher than the standard rate.
And while Capital Gains Tax at the higher rate is being cut to 20 per cent, as the basic rate drops from 18 per cent to 10 per cent, BTL investors have been exempted from the windfall.
''An outright assault'' on the rental sector
David Cox, MD of the Association of Residential Letting Agents, called the budget ‘an outright assault’ on the rental sector.
Experts have warned that the budget will backfire badly for the Chancellor – as costs are passed on to tenants and their ability to save for a first-time deposit is hampered.
Lawrence Hall, of Zoopla Property Group, said: “The higher stamp duty on buy-to-let properties will ultimately make rents more expensive. By hitting the rental sector with higher taxes and lower reliefs, the chancellor is making renting more expensive and getting on the ladder even harder.”
However, despite last week’s disastrous budget for landlords, rents are beginning to rise for the first time in a year.
According to letting agencies Your Move and Reeds Rains, average rents are now rising for the first time since September – up 0.1 per cent in the first two months of 2016 – with the average monthly rent of £791 approximately 3.3 per cent higher than this time last year.
Rents in the East Midlands are up 7 per cent over the last year, with the West Midlands reporting a rise of 6.3 per cent and the East of England seeing rents grow by 6.2 per cent.
As home ownership continues to decline, an unintended consequence of George Osborne’s budget will be a rise in the number of renters, as the recent surge appears to confirm.
For the foreseeable future, it appears landlords will continue to play a key role in the provision of rental stock – and they will continue to enjoy the fruits of supplying a growing number of tenants with housing.
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