Enquiries from investors seeking to acquire buy-to-let properties have increased by 30% since May, following an initial dip in activity after the introduction of the stamp duty surcharge in April, according to the latest figures released as part of Rightmove’s Q3 Rental Trends Tracker.
The data also revealed that new rental listings were up 6% compared to the corresponding quarter a year earlier, while asking rents rose by 0.5% in Q3 to £779 per month, led by gains in the North West of England and Scotland where rents rose by 2% and 1.5% respectively.
Sam Mitchell, head of lettings at Rightmove, said: “Investor activity has bounced back following the stamp duty changes, though some agents report that many investors are looking to knock sellers down on asking prices to make up for the additional stamp duty they now need to pay.”
Mitchell points out that once again Essex and other commuter spots are offering buy-to-let landlords the best total returns, and those looking at long-term investments are seeking out areas with upcoming improved transport links.
She added: “The changes starting in 2017 to lessen mortgage interest tax relief may see some seriously review their businesses and could scale back, though there appears to be no signs yet of landlords exiting the market.”
Brian Murphy, head of lending for Mortgage Advice Bureau, said the findings by Rightmove will make reassuring reading for those who have invested in property as an asset class, or indeed are considering doing so.
He said: “This is one of the first ‘post referendum’ pieces of data analysis – showing statistics from July to September – so this provides us with an accurate temperature check on this part of the market, which is one of the key areas of the UK residential property ecosystem.
“The increase in new enquiries by potential landlords and investors of 30% on the previous quarter might suggest that, following the April changes to SDLT and the Referendum in June, many were holding back to see how the market reacted to both.
“With rental demand in most parts of the country still exceptionally strong, news that the current political and economic climate hasn’t put off new landlords will be welcome to many who are concerned about the current levels of rental stock available."
Overall, the average rent in the UK has increased slightly by £4 a month in the last quarter, now up to £779pcm, with seven out of the eleven regions seeing rental incomes increasing. Even in the four regions which have seen rents cool - the North East, Wales, South East and Greater London - decreases in rents were marginal, with all regions seeing less than a 1% drop.
“This could reflect more stock coming to the market in those areas, meaning that landlords need to price competitively in order to attract tenants,” Murphy added.