One of the most authoritative sources of residential property analysis, the Nationwide, says Rachel Reeves’ stamp duty hike will cost an average £4,000 to each landlord’s purchase costs.
The Chancellor announced an increase in the higher rate of stamp duty for additional dwellings, up from 3% to 5%, which took effect last Thursday.
The Nationwide says that based on data for the year to June 2024, this would affect around 194,000 transactions – that’s around one in five residential transactions in England & Northern Ireland.
“We estimate for a typical buy to let purchase, this would add approximately £4,000 to stamp duty costs. Consequently, this may dampen demand in this part of the housing market” explains chief economist Robert Gardner.
In the broader housing market, Nationwide says house prices rose just 0.1% month on month in October, making the annual growth rate slow to 2.4%, from 3.2% in September.
Gardner continues: “The price of a typical UK home increased by 2.4% year on year in October, though this represented a modest slowdown from the 3.2% pace recorded the previous month. House prices rose by 0.1% month on month in October, after taking account of seasonal effects.
“Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment.
“Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.
“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.