There is little doubt that the new buy-to-let stamp duty reforms will push rents upwards and trigger a decline in the supply of available properties. According to the Association of Residential Letting Agents (ARLA), over 50% of letting agents reported an increase in buyers looking to invest in the buy-to-let market before the increased stamp duty deadline. When asked 6 out of 10 members of the ARLA said that it is inevitable rents will increase to cover the new stamp duty costs. The increases in London will be the heaviest and 8-10 agents said this is likely to cause financial hardship amongst tenants. The 3% increase on stamp duty is set to take effect from the 1st April this year as part of the Governments attempt to curb the buy-to-let market. The Government are hoping this will free up more properties for first-time buyers but it remains to be seen if this extra tariff will have the desired effect. As an example the stamp duty on a £250,000 buy-to-let property will rise from £2,500 to £10,000, while the rate for a £400,000 property will more than double from £10,000 to £22,000. Landlords also face losing the tax allowance currently allowed on the interest paid on their mortgages, this potentially comes into force in 2017. There is little doubt this will also fuel rent increases should this come into force next year. Confidence: Members of the ARLA are reporting that landlords remain in a positive frame of mind despite all the changes. Agents and landlords alike both believe the demand for good quality rental property will continue. One letting agent in East Anglia commented “with property prices rising all the time it is hard to see how current tenants will be able to get onto the property ladder”.
