Market Insight - June/July 2018
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Focus Economy Sales Lettings Stat of the Month

Two-year anniversary of stamp duty surcharge for second homeowners

The number of new landlords coming to the market is falling. In the two years since stamp duty was increased on second home purchases, the number of buy-to-let landlords has fallen by 88,000.

All the evidence points to landlords selling up and buying less. Our research shows that since April 2016 landlords have sold 50,000 homes more than they’ve bought and this at a time when the number of households looking to rent is on the rise. Between April 2016 and April 2017, the number of households renting increased by 164,000. And by 2025 we forecast there will be some six million households renting across the country.

While taxation changes have created a degree of caution for some would-be investors, for others it has been a case of adapting and seeking out new opportunities. And there are opportunities to be had.

As well as buying under company names and buying in cash, many are investing further North, in search of lower stamp duty and higher yields.  In 2017Liverpool topped the league table for the highest proportion of sales to investors (44%), followed by Manchester (40%) and Newcastle with 38%.

For landlords investing in the North it’s all about rental returns. Rental income accounts for 71% of a landlord’s total return in the North compared to 54% in the South.

But that’s not to say there aren’t opportunities to be had in the South too. Yields here may be lower, but capital gains re main higher. In 2017 the average London landlord made a gain of £263,000, over 10 times that of a landlord in the North East. While landlords selling up in the South East in 2017 were most likely to make a profit (96%).

And with less stock on the market, rents in the capital have been rising too. London has gone from having the slowest rate of rental growth in England to having the fastest.

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