British landlords will invest less after the buy-to-let levy deadline

 
British landlords will invest less after the buy-to-let levy deadline [Photo: Courtney Keating via iStock]

When the new buy-to-let investor Stamp Duty levy was first announced by chancellor George Osborne last November, there was predicted to be an immediate impact, with landlords up and down the country expected to rush to purchase before the April deadline passed, meaning they would have to pay three per cent extra on top of standard Stamp Duty charges.

However, now that the deadline has passed, and that prophecy was proven true, it seems likely that we will see a fall in the number of landlords looking to purchase properties to add to their rental portfolios. 

The latest Private Rented Sector Trends report from Paragon Mortgages shows that as the first quarter of the year wound down and we moved towards a reality where landlords would need to pay more to invest, the purchasing intentions from this group fell significantly. 

It said that only nine per cent of respondents in its survey indicated that they plan to invest money in the private rented sector within the next three months. This was a drop from the 14 per cent that was recorded in the month before, showing what real impact the levy has had on landlords. 

Landlords are also now more aware of the implications of tax changes for themselves and their rental businesses. In the last quarter, only 62 per cent of landlords said they understood what the changes meant for them, but this has now climbed as high as 76 per cent.

"The PRS is facing the prospect of a great deal of change as a result of the significant shift we have seen in fiscal and regulatory policy,’ said John Heron, director of mortgages at Paragon. 

"Some landlords are responding to this uncertainty by planning fewer new purchases and investing in their existing portfolios. At the same time credit profiles are very robust and improving, a picture that is somewhat at odds with the picture being painted in some quarters," he explained.