Saturday, October 23, 2021
HomeBusinessSlowdown in rent-to-buy drives huge rent hike

Slowdown in rent-to-buy drives huge rent hike

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Low levels of rent-to-buy activity have raised rents in the UK, according to a Hamptons report.

The proportion of total purchases made by owners with the option to purchase to rent increased by only one percentage point during the stamp duty holiday, from 11 to 12 percent, as investors failed to outperform owner-occupiers during the 15-month break.

Aneisha Beveridge, Hamptons head of research, said: “The holidays resulted in a small increase in the number of new investors buying to rent, but despite their reduced bills, they were not outpacing owner-occupiers by a significant scale “.

Rishi Sunak temporarily removed the stamp duty in July 2020 in an attempt to revive the UK property market and encourage the country’s economic recovery from Covid-19.

On average, homeowners saved £ 3,000 during the stamp tax holidays as the average property investor’s tax bill fell from £ 8,500 in the month before the holiday to £ 5,500 during the holidays.

Investors did not reinvest their savings in property, as prices paid by rent-to-own owners increased by just 1 per cent, to £ 181,000, during the stamp duty franchise. House prices nationwide increased 10 percent over the same time period.

Sales to rental home owners increased most sharply in North East England, where the share of homes sold to investors increased from 21% to 29%.

In September, rents in the UK had risen 8 per cent compared to the previous year, meaning that the average monthly rent reached £ 1,109 a month.

Strong demand for larger homes led to sharp rises in rental prices in the South West, South East and East of England, while rents in the interior of London fell for the 20th consecutive month.

Beveridge added: “The lack of stock in the rental market has supercharged rents.

“While investor buying picked up a bit during the spring, it has not been enough to maintain inventory levels. This has driven rental growth, increasing more than twice as fast as in September 2019.

“The southern areas continue to see the highest rental growth. The pandemic-induced race for space continues to drive demand in areas within reach of the capital.

“But with short actions in the sales market as well, we are also seeing a growing number of homeowners who become temporary tenants after selling their homes to break their chain.

“And this adds to demand and drives rental growth, particularly for larger properties.”

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