Panic buying ahead of Stamp Duty deadline pushes rents down

The Countrywide monthly Lettings Index found that 50% of homes sold in the last two weeks of March were bought by landlords, compared to 18% in the same period in 2015.

Investors brought forward purchases ahead of the surcharge introduction on 1 April, the index found, with an estimated £28bn worth of home sales completed in March ahead of the deadline, a 76% increase on the previous year.

The surge in landlord activity means more housing is available to rent and a total of 22% more homes were available on the rental market in Q1 of 2016 compared to the same period the previous year. The index found the availability of more rental properties contributed to a slower increase in rent rises, at up 3.4% to £931 in the year to March 2016, compared to a 4.5% annual rise to March 2015.

Research director at Countrywide, Johnny Morris, said the increase in homes to rent is likely to be a temporary affect.

“The increase in supply of homes to rent from landlords bringing forward purchases seems to have taken the edge off rental growth. A similar increase in tenants looking for a home to rent though would indicate this may not persist.

“The larger number of sharers and people living with parents means there is a big store of pent up demand in the rental market.”

The index found the number of tenants registering was up 16% in the first three months of 2016, compared to the same time last year.

London experienced the largest increase in new rented homes, up 40% on Q1 2015, but lower growth of tenant numbers, up only 8% over the same period. This has resulted in a rapid deceleration in rental price growth with rents in Greater London growing 2.9% in March, less than half the 7.4% recorded in 2015.