Hamptons: At peak landlords held 14% of sold homes
At the peak this year, investors purchased 14% of homes sold across Great Britain in February, the month before the original end of the stamp duty holiday.
However, over the entire course of the 15-month tax-break investors purchased 12% of homes sold in Great Britain, which is marginally up from an average of 11% during the 12 months before the holiday, but far from the 17% recorded in Q4 2015.
This means there were a total of 215,000 investor purchases across Great Britain between July 2020 and September 2021. While this figure is up from 164,300 during the equivalent period in 2018 and 2019, more transactions have taken place by other buyer types.
Both these numbers remain below the 242,400 purchases which were made during the 15-month run up to the introduction of the 3% stamp duty surcharge on 1 April 2016.
Over the course of the 15-month stamp duty holiday, the average buy-to-let investor’s tax bill fell by 35% – from £8,500 in the month before the holiday, to an average of £5,500 between July 2020 and September 2021.
The average bill came to £5,300 during the first 12 months of the holiday when investors paid the 3% stamp duty surcharge on the first £500,000 of any purchase.
It then rose 17% to £6,200 when the threshold fell to £250,000 between July and September 2021. Average bills are set to return to around £8,400 from 1 October 2021, just below what investors were paying on the eve of the stamp duty holiday.
Overall, the holiday meant that the average investor paid less in stamp duty than at any time since April 2016, when the 3% stamp duty surcharge was introduced.
83% of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers.
During the holiday the average price paid by a landlord rose by just 1% to £181,000, despite house price growth of 10% over the same period.
Average rental growth across Great Britain hit 8.0% in September, the third fastest annual rate of growth recorded this year. Nationally, regions in the South of England have continued to drive rental growth.
The average rent on a new home rose 14.8% in the South West, 14.7% in the South East and 10.8% in the East of England. September marked the sixth consecutive month where annual rental growth hit double figures in the South West.
London rents have also continued to recover. Although inner London rents fell for the twentieth consecutive month, the 4.4% annual fall was the smallest decline this year, and smaller than the 22.1% decrease recorded in April when the market bottomed out.
In outer London, rents grew 3.2% annually in September, rising for the thirteenth consecutive month. This kept Greater London rents overall in positive territory, up 1.8% year-on-year.
Aneisha Beveridge, head of research at Hamptons, said: “The overall impact of the stamp duty holiday on investor activity has been relatively muted.
“The holiday resulted in a small uplift in the number of new buy-to-let investors, but despite their reduced bills, they were not outbidding owner-occupiers on any significant scale.
“But by the same token, their numbers haven’t tailed off since the stamp duty holiday ended either, with rising yields softening the return to more normal tax bills.
“Stamp duty holidays have traditionally been an expensive give away for the chancellor. They have often been deployed to jump start the toughest markets in the months and years following big economic downturns.
“However, despite fewer people paying stamp duty than ever before, this holiday will go down as one of the cheapest giveaways for the treasury in history as buyers paying the 3% surcharge have kept revenues up above 2019 times.
“It is likely, that over the course of the stamp duty holiday, those paying the 3% surcharge will have contributed close to half of all residential stamp duty receipts.
“But our calculations show that only around half of people paying the 3% surcharge are buy-to-let investors, with the other half made up of second home purchasers or those buying a primary residence without selling their old one.
“While rental growth rates typically peak over the summer months, this year they have continued to rise into the autumn. This means average monthly rents have passed £1,100 for the first time nationally, led by big increases on larger homes.
“The average four-bed home now costs 120% more than a one-bed, up from 95% pre-pandemic. While we are expecting this growth to moderate in the final few months of the year, it is likely 2021 will mark some of the fastest rates of rental growth in a generation.”