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

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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

Paul
Paul 25 May 2016

Estate agents are pathetic when it comes to fees. They have this 'I had to do it at 1% because that's what the others were quoting' mentality. We are the most expensive agents in our area, charging double...

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HMO Midlands Landlady 24 May 2016

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CommercialTrust 20 May 2016

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Johna
Johna 20 May 2016

"Easier said than done" is what I would say. Of course, it would be more than great to have more in quality and affordability, but I do not trust talk anymore.. What is said is not what is happening.

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Johna
Johna 20 May 2016

in my humble opinion being fair like THE most important! I myself have had bad experience with unfair landlords... not to mention that I know how to do a proper end of tenancy cleaning since I am a fantastic...

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richardrawlings
richardrawlings 18 May 2016

NB - even if we doubled our commission levels in the UK, we'd still be by far the cheapest agents in the entire world.

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Agent_PeeBee
Agent_PeeBee 18 May 2016

Clueless. Someone needs to take these people's computers away from them so they can do no more harm than they already have.

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richardrawlings
richardrawlings 18 May 2016

Nonsense! The cost of selling a house nowadays has little bearing on the fees charged. Don't believe your own spin on this. Fees have spiralled down to pathetic levels in areas where weak agents have allowed...

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Simon Oliver
Simon Oliver 16 May 2016

The best solution is to buy a property that has built-in income generating potential: a nice house with a couple of gites in the grounds is a good start. In France, the rune of thumb is that one 2-bedroomed...

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warren 03 May 2016

It's enough to make me weep into my Pimm's :(

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james anderson 03 May 2016

The sad demise of the croquet lawn...

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