New research has revealed that rents are going up as a direct result of the 3% stamp duty increase introduced in April last year.
The annual rate of rental growth in Britain doubled between June and July to 2.2%, driven by a turnaround in the London market.
According to the latest Countrywide monthly lettings index, following eight months of falls, rental growth in the capital turned positive in July.
Rents in London ended the month 2.1% up on last year, as the number of properties available to rent in the capital fell sharply.
Countrywide said this was a direct result of a fall in the supply of homes available to rent following a drop in the number of landlords buying since stamp duty increased by 3% on second homes and buy-to-let properties.
July saw the proportion of London homes bought by a landlord fall to the lowest level for seven years, with just 10.5% of the homes sold in the capital bought by a landlord.
The number of would-be tenants in the capital was unchanged on last year (up 1%), meaning the same number of people were chasing fewer homes.
Across Great Britain, the number of homes to rent grew 4% over the year, but the rate of growth slowed in each of the last 10 months.
Outside London the number of tenants registering was down 5% on last year.
Johnny Morris, research director at Countrywide, said: “The rush to beat higher stamp duty rates in April 2016 caused a spike in the number of homes to rent, but that has now worked its way through the market. The stock of homes to rent is now falling in the more expensive parts of the country because higher tax rates have dissuaded large numbers of landlords from buying. Ultimately this means fewer homes on the market and higher rents.
“Across the Midlands and the North, higher rates of stamp duty are much less of a disincentive to investors. Here the number of homes on the market remains up on last year, buoyed by investors living in London and the South East choosing to buy in the Midlands and the North.”
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