British landlords now seeking out cheaper properties to purchase

by Gary Whittaker

The future buying intentions of landlords around the UK has been affected somewhat by the change in taxation laws as of the start of April, with new reports suggesting that those operating in the PRS will be more likely to look for less expensive homes than they have in the past in order to lower the cost of coming to market. 

Landlords now have to pay three per cent on top of their Stamp Duty charge when investing in properties, after the government moved to make it more expensive to buy to try to improve the housing stock available to those looking to get themselves onto the property ladder. 

However, those operating in the booming PRS are still looking to invest in the market, rather than turning their back on it, according to the latest report from Countrywide. It shows that when the cost of investing in property went up, those in the sector simply started lowering the prices they would pay to offset the additional tax. 

This meant that the average price paid for property by landlords has fallen by 8.3 per cent month on month, from £194,000 to 178,000 between March and April, showing just how adaptive landlords and the wider rental market can be to changing conditions and regulations. 

London saw the largest drop in what landlords are now paying for properties. The drop of 16.4 per cent in average values for homes sold to landlords in the capital showed how attitudes have changed in the space of just a single month. 

These figures will perhaps alleviate fears that the Stamp Duty levy would mean a severe drop in available rental stock, as landlords are now merely adjusting their target properties rather than choosing not to invest.

"April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3 per cent charge it seems that landlords are already adjusting their behaviour. 

"In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill," said Johnny Morris, research director at Countrywide.

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20-May-16Legal News