This article by Ryan Etchells, Chief Commercial Officer at finance company Together

Among the 11% of buy-to-let landlords planning to exit the market this year, 13% blame this on the increase in stamp duty and being priced out of the market. 

Indeed, as the new stamp duty increases came into effect, 15% of respondents view the hike as the biggest challenge to their property investment ambitions this year.

Others are also desperately lobbying for the Chancellor to reverse the decision to increase stamp duty for second homes and investment properties with nearly a quarter of landlords reporting to property lender Together, that the Labour Government should prioritise “reducing or reforming” stamp duty on additional properties to prevent the loss of much-needed rental stock in the market.

Reeves announced the budget in October that the 3% surcharge on second homes and buy-to-let investment properties would increase to 5% – adding thousands of pounds to the cost of buying a rental property. 

Although the Chancellor ruled out further raises to income tax and national insurance in the Spring Statement, property professionals have raised concerns she could raise stamp duty even further in future – putting even more financial burden on hard-pressed landlords. 

Nearly half (44%) of buy-to-let landlords still harbour strong concerns about Labour’s current plans and future policies for the buy-to-let sector, believing these policies will negatively impact landlords.

The research also identified landlords’ concerns over the costs of upgrading rental homes to meet energy performance standards and implementing the Renters Rights Bill, which has its next hearing in the House of Lords on April 22nd.

Although two thirds (63%) of buy-to-let landlords were positive about the proposed changes to improve the energy performance ratings on rental properties, a quarter (25%) wanted the Government to prioritise tax relief or financial incentives for landlords investing in energy efficiency upgrades.

Landlords were also generally supportive of the implementation of the Renters’ Rights Bill, which would see a new ombudsman oversee disputes and possible eviction cases, with 62% feeling positive about its effect on the buy-to-let sector. However, a quarter of those surveyed (25%) wanted to see the bill offering a greater balance between landlords and tenants before the bill becomes law.

And while 61% of landlords are generally supportive of the new stamp duty regime, 23% have called for reform on additional properties. Despite higher costs, wider economic pressures and policy changes being of concern, appetite within the buy-to-let market remains resilient with investors adopting new strategies to deliver returns. Together saw its own buy-to-let lending increase by 16% to 2.2bn by the end of 2024. 

Meanwhile, buy-to-let landlords are looking at ways to best deal with the rising costs associated with the tax and regulatory changes. 

Among these, the top five responses were: 

Ryan Etchells, Chief Commercial Officer at Together comments: “Higher Stamp Duty may trigger some individual, private landlords to carefully consider how these costs will impact their property plans. 

“The government must consider the knock-on effect this will have on providing good quality rental stock which is a vital component of the housing market. With affordability for first time buyers  becoming ever more out of reach a growing number of the population rely on rental properties. Constant attacks on the sector will only force landlords out of the market, reducing the number of properties available and forcing rent upwards, further impacting the ability to save for a deposit.

“As expected, nearly a quarter of landlords told us that the Labour Government should prioritise “reducing or reforming” stamp duty on additional properties in order for the sector to be financially viable.

“That said, we have seen many amateur landlords decide to cut their losses and leave the market entirely, whilst many more are pivoting to the current climate. For example, we have seen many professional landlords looking to diversify their portfolios to spread the risk across residential classes as well as commercial sites. 

“They are now turning to student accommodation, social housing holiday lets and mixed-use units to broaden income streams. In particular,, we are seeing more houses being converted to houses of multiple occupancy (HMOs), as these can sometimes offer a better yield than a single residency.

“Whilst it’s disappointing that the new Stamp Duty charges are now in place, our customers tell us that there are still plenty of opportunities out there. Demand for rental homes remains, and landlords who can evolve to address these challenges will surely find success.”