Among the headlines were numerous articles citing new figures from rental app Bunk, which estimate that the value of the UK’s private rental market stands at a whopping £51.8bn a year, generated from 5.2m tenants. That’s larger, they tell us, than the GDP of 130 countries around the world, and 90 per cent of companies on the FTSE 100, and rather suggests that the recent policy attempts to make life difficult for private landlords aren’t really having the desired effect. As Rosie Carr explains on page 26, if you get your sums right buy-to-let investments remain a useful investment for many despite the added difficulties.
Chief among these is the higher rate of stamp duty land tax applied to those buying additional properties, most of who are doing so for the purpose of renting them out. The additional 3 per cent applied to the standard rate of stamp duty can add up to a lot of money, and when it was introduced did appear to put off many would be landlords. Now, however, the market seems to simply be absorbing the additional tax as a cost of doing business – or perhaps haggling down the price to negate the extra stamp duty, which could partly explain figures from Zoopla that show a widening gap between asking and selling prices, most pronounced in the weakened London market. Buy-to-let transactions in England are on course to top 200,000 this year, around two-thirds of which are in the sub-£250k bracket once the preserve of the first-time buyers now attracted instead to help-to-buy funded properties. Results this week from buy-to-let lenders Charter Court and OneSavings also offer little indication of a stalling rental market.
Given the importance of stamp duty as a stick with which to beat landlords, the most eye-catching news of the week seems rather odd – a Times story that the new chancellor Sajid Javid is considering a shake-up of the country’s stamp duty regime that will see the seller rather than buyer pick up the tab. There are numerous reasons why such an idea is a non-starter, not least that elderly downsizers would be hit with a huge tax bill – wreaking havoc on many a retirement plan and further exacerbating the crisis in late-life care – and the chancellor quickly distanced himself from the idea. But given his subsequent claim to be a “low-tax guy” it is odds on that his first Budget this autumn will contain some major policies designed to keep the housing market moving. Even if landlords don’t share whatever largesse he delivers, it does suggest oversold UK property may – counterintuitively – offer something of a safe haven against the current fragility of financial markets.
