Landlords are targeting cheaper homes to offset April’s increase in stamp duty, new figures show.
According to the latest Countrywide Lettings Index, the average house price paid by landlords fell 8.3% in April.
Average investors paid £178,000 for a home in April 2016, compared to £194,000 in March and £188,000 a year ago.
London saw the biggest drop in average price paid, falling from £436,000 in March to £365,000 in April.
While overall house prices in London rose 13.9% over the last year, the capital’s landlords paid an average of 8.2% less than they did in April 2015.
Generally lower priced markets saw a less marked response from landlords with average prices paid by investors rising month-on-month in the North East and Yorkshire.
The number of landlords purchasing homes in April also fell following the rush to beat the stamp duty deadline.
Buyers brought forward transactions to beat the introduction of the stamp duty charge, with 61% more landlords buying in the first quarter of 2016 compared to the first quarter of 2015.
Many sales which would otherwise have normally completed in April were pulled forward into March. Around half the number of landlords bought in April 2016 compared to April 2015. The number of sales to first-time buyers rose by 19% over the same period.
Average rents increased 2.0% over the last year, leaving the average monthly UK rent at £932. Rental growth is now half the rate it was in 2015. Affordability constraints and the increase in the number of homes coming onto the rental market continues to slow rental growth.
Johnny Morris, research director at Countrywide, said: “April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3% charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill.
“There’s early signs that first time buyer numbers are increasing in as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer-term trend.”
Change in average price paid by landlords purchasing homes in April 2016
| Area | Average investor price paid | Month-on-month price change | Year-on-year price change |
| London | £364,713 | -16.4% | -8.2% |
| South East | £211,342 | -13.8% | 1.9% |
| West Midlands | £125,591 | -9.6% | 7.4% |
| South West | £175,533 | -7.4% | 1.6% |
| East of England | £190,222 | -4.9% | 5.9% |
| East Midlands | £116,207 | -2.8% | -7.0% |
| North West | £126,278 | -2.5% | 6.8% |
| Scotland | £95,539 | -2.1% | 1.8% |
| Wales | £116,352 | -1.0% | 1.5% |
| Yorkshire & Humber | £135,962 | 0.4% | -0.5% |
| North East | £132,892 | 1.1% | 7.1% |
| Great Britain | £178,324 | -8.3% | -5.5% |
Source: Countrywide Lettings Index
