Is rent being driven to record highs by stamp duty changes?

Is rent being driven to record highs by stamp duty changes?

According to Benham & Reeves Residential Lettings, collated rental value figures for 2015 clearly demonstrate that rental values have climbed to record highs across almost every borough.

Thanks to the changes in stamp duty, fluid job markets and the way many overseas professionals are taxed in the UK, renting has become a much more attractive option.  With demand continuing to rise and the anticipated exit of amateur landlords from the market, rental values in 2016 are likely to continue on this upward trajectory.

Virtually every borough in zones 1 and 2 saw rental values increase by more than 4% year on year.  In fact, only Richmond-upon-Thames and a small area around Edgware Road in central London saw rents fall.  Rental values became slightly more modest the further away from the city centre with even outlying boroughs such as Barnet and Ilford seeing significant growth.  Hackney was the clear winner with a staggering 33% increase in rental values over the past year although Bow, Bethnal Green and Haringey all experienced double digit growth, as well.

As the British economy has emerged from recession and tenants have finally moved to bigger accommodation in line with increasing household income, the rental market has benefitted.  The most significant change, however, has been the changes to stamp duty which have affected London more than any other area of the country.  With the average of a house in London now standing at over £500,000, many family homes are now liable for the 10% stamp duty rate with many modest family homes even incurring the 12% stamp duty rate.  Many tenants have calculated that they can rent for years, often in better neighbourhoods than those in which they could afford to buy, for the sum they'd pay in stamp duty alone.


Marc von Grundherr comments: “George Osborne has done more for the rental market than any other chancellor in history,” , Lettings Director of Benham & Reeves Residential Lettings, “Thanks to the changes in stamp duty rates, he has made renting long term a more attractive option for many tenants.  Couple that with the fact that many overseas tenants can write their rent off against tax but must pay capital gains on any property they own and renting becomes a no brainer.

We are advising landlords who are already in the market are advised to hang onto the properties, and not be tempted to sell ahead of changes to wear and tear allowance and mortgage relief. Many nervous investors will leave the market and when they do, supply will be limited even further. The rent increases that will inevitably result will more than mitigate landlords' extra costs.”

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Latest Comments

Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

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Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

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Chris
Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

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Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

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Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

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