Government tax policies shrink buy-to-let property purchases by 250,000 over five years

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The government’s assault on private landlords is achieving its much-predicted end-game as new research reveals that 250,000 fewer buy-to-let properties have been purchased by landlords over the past five years.

Estate agency Hamptons says the reduction in buy-to-let property purchases is a direct consequence of the government’s 3% stamp duty surcharge on second home purchases and the Section 24 tapering of mortgage interest relief.

It is five years since the additional stamp duty charge was introduced for landlords and four years since the mortgage interest changes began to kick in.

These changes have also generated other dramatic changes – in 2015 landlords bought 16% of properties on the market each year, but today that figure is 11%.

London hit hardest

Hamptons also says that London and the SE have seen the greatest drop in landlord purchasing activity, from 20% of the market in 2015 to 11% now.

As a result, landlords have purchased 61,300 homes in London since 2016.  However, this number would have risen to 103,300 or 69% more homes had the tax changes not been introduced.

This drop-off in new investment means 81% of all rental homes in the capital today were bought before April 2016, compared to just 65% in the North West where landlord purchases have remained more resilient.

Aneisha Beveridge, Head of Research at Hamptons, says: “The tax changes introduced from 2016 onwards have undoubtedly taken the heat out of the buy-to-let market.  Landlord purchases have dropped and consequently the rental sector is 7% smaller than it was at its peak in 2017.

The NRLA recently called for the 3% additional stamp duty levy to be scrapped.

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