While the stamp duty relief had big a role in firing up the housing market – it equally stimulated the market for both owner occupiers and investors, Hamptons data indicates.
Some 12% of homes bought during the pandemic were to investors, compared to 11% in 12 months before the introduction of the tax relief, meaning landlords’ share of the market barely changed.
Investors’ market share has been higher historically, as it was 17% in Q4 2015 in the run up to the introduction of the 3% stamp duty surcharge on 1 April 2016.
Aneisha Beveridge, head of research at Hamptons, said: “The overall impact of the stamp duty holiday on investor activity has been relatively muted.
“The holiday resulted in a small uplift in the number of new buy-to-let investors, but despite their reduced bills, they were not outbidding owner-occupiers on any significant scale.
“But by the same token, their numbers haven’t tailed off since the stamp duty holiday ended either, with rising yields softening the return to more normal tax bills.
“Stamp duty holidays have traditionally been an expensive give away for the chancellor. They have often been deployed to jump start the toughest markets in the months and years following big economic downturns.
“However, despite fewer people paying stamp duty than ever before, this holiday will go down as one of the cheapest giveaways for the treasury in history as buyers paying the 3% surcharge have kept revenues up above 2019 times.”
There were a total of 215,000 investor purchases between July 2020 and September 2021, up from 164,300 during the equivalent period in 2018/19.
While the stamp duty holiday meant the tax wasn’t paid on the first £500,000 of property purchases until July 2021, few landlords looked to buy more expensive properties.
The average price paid by a landlord over the last 15 months rose by just 1% to £181,000, despite house price growth of 10% over the same period.
Indeed, 83% of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers when you consider they still had to pay the 3% stamp duty surcharge.
During the period where stamp duty wasn’t paid on purchases up to £500,000 the average buy-to-let investor’s tax bill fell by £3,000 or 35%, from £8,500 to £5,500.
Bills are now set to return to around £8,400, just below what investors were paying on the eve of the stamp duty holiday.
Average rental growth across Great Britain hit 8.0% in September, the third fastest annual rate of growth recorded this year.
The South of England has driven rental growth.
The average rent on a new home rose 14.8% in the South West, 14.7% in the South East and 10.8% in the East of England
London rents have also continued to recover. Although Inner London rents fell for the 12th consecutive month, the 4.4% annual fall was the smallest decline this year, and smaller than the 22.1% decrease recorded in April when the market bottomed out.
In Outer London, rents grew 3.2% annually in September, rising for the thirteenth consecutive month.
Beveridge added: “It is likely, that over the course of the stamp duty holiday, those paying the 3% surcharge will have contributed close to half of all residential stamp duty receipts. But our calculations show that only around half of people paying the 3% surcharge are buy-to-let investors, with the other half made up of second home purchasers or those buying a primary residence without selling their old one.
“While rental growth rates typically peak over the summer months, this year they have continued to rise into the autumn. This means average monthly rents have passed £1,100 for the first time nationally, led by big increases on larger homes.
“The average four-bed home now costs 120% more than a one-bed, up from 95% pre-pandemic. While we are expecting this growth to moderate in the final few months of the year, it is likely 2021 will mark some of the fastest rates of rental growth in a generation.”