Buy to let backlash: rent supply falls year-on-year and renters are set to pay the price
The supply of rental properties is fell year-on-year in April, down by five per cent, as letting agents predict that the stamp duty hike on buy to let properties will end up hitting renters in the coming months.
The average number of properties managed per branch decreased from 193 to 183 year-on-year, according to data from the Association of Residential Letting Agents (ARLA).
There was a short-term surge in rental properties; buy to let landlords rushed to finish transactions on houses in March to avoid paying the stamp duty surcharge that came into effect on the 1 April. This drove a jump in properties managed per branch month-on-month from March, up eight per cent – the highest level this year.
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However, with the year-on-year drop in rental properties available, rents are expected to rise as a consequence of the stamp duty changes. Two-thirds of ARLA agents predicted that the government's buy to let levy would push up rental costs for tenants in the future.
David Cox, managing director of the ARLA, said: "It's likely that this increase in supply is only temporary. At the end of April we saw a flurry of landlords seizing the last few moments before the stamp duty rise to complete sales, triggering an increase in the supply of empty rental homes to be filled this month.
"However, we expect that fewer investors will be taking on buy-to-let properties over the next six months, following the price hikes, meaning that once these properties are filled we'll see supply nose-dive once again."