Tenants face paying more in rent because of stamp duty reforms on buy to let properties, says the Association of Residential Letting Agents (ARLA).
In their latest report, the Association says that 57% of its members say rents for tenants will rise after the stamp duty hike comes into effect with landlords having to push their increased costs onto tenants.
In addition, 52% of letting agents have seen an increase in buyers wanting to invest in buy to let property and beat the stamp duty deadline.
When questioned further, 63% of letting agents say that the supply of buy to let property will fall after the stamp duty deadline passes in April, after that landlords will be slowly forced from the market.
Stamp duty changes will hit small landlords
ARLA’s managing director, David Cox, said: “The stamp duty changes will hit small landlords and also institutional investors and our members report landlords are rushing to snap-up buy to let properties but it’s likely that we will see the market fall like a stone after April and, probably, it will not pick up again until 2017.
“This will almost certainly mean rents will increase as supply drops and competition intensifies for the limited availability of property.”
Mr Cox added: “Some landlords will withdraw from the buy to let market but those who can take the extra stamp duty hit will raise rents to cover their extra costs. We are concerned that government rhetoric of helping people onto the housing ladder does not tally with their continuing to target the rental market.”
He pointed out that the demand for private rented homes continues to grow around the country and the supply is now ‘an issue in most parts’.
The report from ARLA also highlights that buy to let property demand rose by 19% in February with each letting agent having 37 new prospective tenants signing up with them and the number of properties to rent on their books grew from 172 in January to 176 in February.
Buy to let landlords push mortgage demand
Meanwhile, private residential landlords are said to be behind a big surge in enquiries about mortgages as the impact of buy to let tax changes hit home.
The study carried out by Nottingham Building Society reveals landlords are asking how they can improve their existing mortgage deal and others are wanting to expand their portfolio.
The building society says that 35% of mortgage brokers are reporting an increase in the number of landlords making enquiries, with 42% of brokers saying they’ve received enquiries about landlords remortgaging and 31% say landlords are looking to expand their property portfolio.
The report also reveals that landlords with property in London are the most likely to sell some of their portfolio while landlords in the North East are the least likely.
