The higher stamp duty surcharge of 5% is having a limited impact on landlord behaviour, according to Hamptons estate agents.
Some 10.7% of sales agreed across Great Britain in November went to a landlord, above the 2024 average to date of 10.2%
Most investors who agreed deals in advance of higher stamp duty rates being announced in the Budget went through with the purchase.
Some 28% of sales agreed by investors in the three months running up to the stamp duty surcharge increase were either renegotiated or remarketed, around half the level recorded during the aftermath of the 2022 mini-budget when mortgage rates rose quickly.
The increase in stamp duty rates means that on a typical £300,000 purchase an investor pays £17,500 (5.8%), a mover £2,500 (0.8%), and a first-time buyer nothing.
Aneisha Beveridge, head of research at Hamptons, said: “Early signs suggest that new landlords have shown relative resilience to yet another cost increase.
“While the number of buy-to-let purchases by landlords remains muted by historic levels, their numbers have not collapsed. However, purchases are confined to the Midlands and Northern England which are becoming buy-to-let heartlands where the surcharge bites slightly less hard.
“While no landlord will welcome a tax rise, falling interest rates next year will likely push buy-to-let returns to near the top of investment league tables.
“With savings rates heading closer to 3%, gross yields in Northern England of above 8% will increasingly attract money that would previously have gone elsewhere.
“While political headwinds haven’t gone away, these risks and added costs are increasingly being priced into buy-to-let returns in the form of higher yields.”
Since the introduction of the surcharge, the largest falls in investor purchases have been in the South of England, particularly outside London, where high stamp duty bills can make buy-to-let unviable. On a £500,000 purchase, the stamp duty bill for an investor now stands at £37,500 (7.5%), rising to £40,000 (8.0%) from 1 April 2025.
In contrast, landlord purchases have held up more strongly in Northern England, with investors in the North East purchasing a larger proportion of homes than before the introduction of the surcharge in 2016.
Last month, 18.4% of homes sold in the North East were bought by a landlord, 0.2% above November 2015 levels before the stamp duty surcharge was introduced. Here, the average investor paid £115,000 for their buy-to-let, meaning their stamp duty bill would have risen from £3,450 to £5,750.
A growing share of buy-to-let purchases in the North of England are by investors who live in the South of England and have been attracted by lower stamp duty bills alongside higher yields and faster house price growth over the last few years.
The average gross yield achieved on a buy-to-let purchase in the North East this year was 9.7%, significantly higher than the average 5.7% yield achieved in London.
