There has been a significant increase in the number of buy-to-let landlords rushing to complete their property purchases in the run-up to the end of the stamp duty holiday, according to the latest Hamptons Monthly Lettings Index.  

Last month, landlords made up 15% of buyers in Great Britain, the highest figure since December 2016.

The average price paid for a home by a landlord in November was £180,000, around £80,000 less than that paid by an owner-occupier.  This means a typical investor who still pays a 3% surcharge will incur a stamp duty bill of £5,400 if they complete before the holiday ends. However, if they miss the deadline their bill will rise by £1,100 to £6,500.

Landlords will pay an estimated total of £365m in stamp duty on the sales they have agreed between September and November if they complete before 31st March 2021. However, this figure has the potential to rise by 20% or £74m to £440m if the stamp duty holiday is not extended and they complete after the end of March next year.

Regionally this rush has been concentrated in the Midlands and the North. Some 22% of homes sold in the West Midlands were bought by an investor, followed by 18% in both the North East and North West. In London, the figure stands at 15%, up 2% from three months ago.

There is mounting evidence that rental growth is picking up steam, with rents in Great Britain rising for the second month running since March.

Across Great Britain, the annual rate of rental growth more than doubled from 1.4% in October to 3.0% in November.

All nine regions in England saw the rate of rental growth accelerate between October and November, with rents rising in each region.   However, rents in Wales fell by 3.4%, the third consecutive month of falls.

A month after rental growth in Great Britain turned positive for the first time since March, rents also began to rise in the capital following eight months of falls.

Aneisha Beveridge, head of research at Hamptons, said: “Just like in the months leading up to the introduction of the 3% second home surcharge back in 2016, landlords have rushed to take advantage of reduced stamp duty bills.  But the difference between today and 2016 is that the stamp duty cliff edge is around five times smaller, meaning the financial impact of missing the deadline is reduced.

“With over half of investor purchases made in cash during November, those taking advantage of the holiday are disproportionately larger investors expanding portfolios rather than new investors starting out.  And with landlords also making up a rising proportion of sellers, in many cases, larger landlords are buying homes from smaller landlords.

“The rental market has shown signs that it is shaking off its Covid-induced hangover with rents rising in every region of England for the first time since March.  With nearly a fifth fewer new rental homes coming onto the market than last year, it has put upward pressure on the recovery in rental growth.  It is, however, likely that the homes being bought by landlords now will hit the rental market early next year which could serve to stifle rental growth in 2021.”