A tax rise coming in just five weeks’ time could mean the death knell for buy to let. 

A new analysis shows that 83% of all housing transactions will incur stamp duty from April, when thresholds revert to an earlier level. Currently only 49% of transactions incur the tax. 

The report reveals that first-time buyers will be less affected, with only 40% of their transactions subject to tax, compared to 20% under existing rules.

But for landlords, the stamp duty surcharge increase from 3% to 5% for second homes and buy-to-let properties from April will place an additional financial burden on an already stretched market.

The study – undertaken by investment service UOWN using government, Zoopla and Rightmove data – has added this new tax burden on to existing costs incurred by landlords as a result of regulation changes in recent years. 

These include higher mortgage costs, increasing insurance premiums, stricter EPC rules and more. The study particularly not that the phased removal of mortgage interest tax relief “has already dealt a heavy blow to landlord profitability, further compounding the issue.”

Although there are signs that demand may be levelling off, UOWN suggests that UK rents are still expected to rise by an average 17.6% over the next five years, primarily due to landlords exiting the market. 

Rightmove says the average newly advertised rent outside of London stands at £1,341 per month (pcm). In the capital, tenants still face an average rent of £2,695 pcm.

But UOWN warns that even if demand stabilises in 2025, more landlords are selling their properties (up 37% year on year in December) further shrinking the rental stock.

“The proposed stamp duty increase, combined with mounting regulations and rising costs, are pushing many landlords to the brink” claims the investment service’s managing director Haaris Ahmed. 

“The UK rental market is already under severe pressure, and the last thing tenants need is more landlords being forced to sell. This will not only drive up rental prices but also create instability, leaving tenants facing the stress and disruption of having to move.”

Rather than discouraging investment, and to possibly prevent this trend from continuing, he argues that policymakers should focus on supporting landlords to maintain a fair and sustainable rental market for all.