The 1 April 2021 marked the five-year anniversary since the 3% stamp duty surcharge was introduced on second home purchases in Great Britain. This coupled with the tapering of mortgage interest tax relief on buy-to-lets (beginning in the 17/18 tax year), has meant that landlords have bought fewer homes and the private rental sector has shrunk, according to the April edition of the Hamptons Monthly Lettings Index.
Between April 2016 and the end of March 2021 landlords purchased 700,100 homes across Great Britain. However, the research by Hamptons shows that without the tax changes, landlords would have bought an extra 249,800 or 36% more homes.
Fewer landlord purchases have meant there were 4.91m privately rented homes in Great Britain in 20/21 accounting for 17.5% of households – 381,990 fewer than the sectors peak in 16/17. Had these tax changes not been introduced the firm calculates that there would have been 5.16m rented homes in Great Britain today, making up 18.4% of households.
Southern regions, where properties are more expensive, have been hit hardest by the tax changes. In London, the share of homes bought by landlords fell from a high of 20% in 2015 to 11% during Q1 2021.