"It is no surprise that renters and homeowners are fleeing from the South"
The stamp duty holiday resulted in an exodus of inhabitants from cities such as London for a cheaper alternative where they can get more for their money. Despite the stamp duty tax holiday ending in September 2021, there has been a continued exodus of inhabitants from the South of the UK to the North due to the recent recession coupled with the cost-of-living crisis. These factors have fuelled the inflation of living costs and mortgage repayments leaving those in the South to cut back on costs even if it means relocating further afield. Group Chairman of the Cornerstone Tax, David Hannah, highlights that the cost-of-living crisis has pushed prospective homeowners and renters to live elsewhere now that the cost of living in cities such as London has become unattainable.
Homeowners outnumber renters in London by nearly two-to-one; however, tenants tend to move home more often and are much more likely to leave. In 2022 90,370 tenants left London compared to 62,210 homeowners moving out.
The move away from London has been driven by soaring inflation which has impacted the costs of renting, which are up by 9.1% since last year. This comes as new findings from Hamptons Estate Agents found that two in five renters moving home in London chose to leave the capital for good last year, up from 28% a decade ago. The number of households fleeing the city is double the number in 2012 and the highest since records began.
It is no surprise that renters and homeowners are fleeing from the South, especially with many choosing to move further North due to the overwhelmingly cheaper cost of housing. As of January 2023, the Land Registry reported that the average price for a house in the North East of England was £126,600 while the average cost in the South of the UK is £337,100 making the South £210,500 more expensive than the North East.
The recent report from the government on Stamp Duty Land Tax statistics for the 2021/22 financial year found that the UK experienced a rise in non-residential receipts, ranging from a 32% rise in the East Midlands (from £200 million to £265 million) to a huge 80% rise in the North East (from £50 million to £90 million. The East of England and the North West are the second and third most popular locations for housing market activity, with 39,237 and 38,838 property sales, respectively. More than a third (38%) of tenants from London moved to the Midlands or North, up from 27 percent in 2019 and above the 13% of homeowners moving to the same regions. This will come as encouraging news for the government as it indicates increased commercial activity and development outside of the South East.
David Hannah, Group Chairman at Cornerstone Tax discusses the rise in housing market activity in the North:
"It certainly appears that amidst the cost of living crisis, more and more people are leaving London due to the unaffordable nature of renting or buying in the capital. However, I don’t expect that this waning of domestic demand will materially affect house prices in the area as there is so much interest and investment from foreign buyers which has tended to keep the market buoyant.
“It appears that on a residential level an increasing number of people are leaving London for the North, and interestingly, the government’s latest stamp duty statistics highlight there has been an 80% rise in non-residential purchases in the North East too. This will come as encouraging news at a time when the levelling up agenda is a hot topic.”