Stamp Duty Is Eroding Rent Growth In London
Rent growth has nearly halved across the UK since an additional 3% stamp duty on second homes came into force 12 months ago, according to the latest Landbay Rental Index by MIAC.
Annual rent growth in the UK slowed to 0.9% in March 2017, less than half the rate of 2.27% at the end of March 2016. Outside of London, the pace of growth has slowed by over a quarter since the tax hike, from 2.43% in March 2016, to 1.78% in March 2017. The average price in the UK has now reached £1,191: £1,880 in London and £752 outside the capital.
The London boroughs of Kensington/Chelsea, Westminster and Camden have seen the greatest fall in average rents over the last 12 months, dropping by -3.65%, -2.64% and -1.49%, respectively. In contrast, rents within the boroughs of Barking/Dagenham, Havering and Bexley have grown by 2.72%, 2.7% and 2.25% as demand for properties in the outer boroughs of the city increased.
Landbay managing director of intermediaries Paul Brett said the last 12 months, a period marked by the stamp duty surcharge last April, changes to mortgage interest tax relief, tighter underwriting criteria and the pending ban on letting agent fees, have been tough for the private rented sector. Brett said we need positive measures aimed at encouraging the development of high-quality rented properties, a step change outlined in the recent Housing White Paper.