The Association of Residential Letting Agents (ARLA) has warned that, although we are now experiencing the usual seasonal calm, a storm is coming. In its latest survey of members, agents reported a 24% increase in interest from buy-to-let investors.
There has reportedly been an upsurge in buy-to-let activity ever since George Osborne announced in his autumn statement an extra 3% levy on top of normal stamp duty rates for purchases of additional property. Now with just over two months remaining until the beginning of the new tax year, when the changes will take effect, buy-to-let investors are clamouring for as much as they can get their hands on in order to avoid the additional costs they would otherwise incur by waiting.
The survey showed that 62% of landlords believe rents will have to increase as a result of the chancellor’s new tax rise, and some 65% think the supply of private rental homes will be stymied due to the tax rise putting off new landlords from entering the market.
The report found that supply, demand, and rent increases all declined in December, following the usual seasonal trend. However, ARLA warns that after April, it is very likely we will see a decline in the number of available buy-to-let properties on the market. When demand goes back up, the competition for property across the country will be fierce.
George Osborne says the new tax will raise an extra £1 billion for the Treasury by 2021. However, he may not get as much as he hopes for, as a survey by the Residential Landlords Association found that 10% of landlords plan to exit the market, while one in three said they will no longer consider investing after April.