A flood of new homes has come on to the private rental market as a result of landlords letting out new purchases.
According to Countrywide, landlords went on a buying spree in the first quarter of this year, ahead of the 3% Stamp Duty surcharge implemented on April 1.
Countrywide estimates that £28bn of home sales were completed in March alone, a 76% increase on March last year.
In the last two weeks of March, Countrywide says half of all sales completed were by landlords. In the same two weeks of last year, landlords accounted for just 18% of purchases.
The landlord buying frenzy meant that 22% more homes were brought to the rental market in the first quarter of this year compared with the same period last year.
In London, there was a 40% increase in the number of rental properties being put on the market.
The growth in available stock cut rent rises. Nationally, rents rose 3.4% over the year to March compared with 4.5% the previous year, to stand at an average of £931.
The biggest slowdown in rental price growth was across London at 2.9% in March, less than half the 7.4% recorded the previous year.
The Chancellor’s objective with the surcharge is to slow down the buy-to-let market and help first-time buyers.
Johnny Morris, research director at Countrywide, said: “Quite at odds with the intentions of the policy, the first measurable effect of the introduction of the new Stamp Duty rate has been to increase the number of homes owned by landlords, although this will likely be a temporary effect as we see reduced investor activity in future months.”