The buy-to-let market has bounced back following the stamp duty increase in April, according to a property listings website.
Rightmove said that buyer enquiries from potential landlords and investors were up 30% in September compared to May, suggesting the market has recovered from the impact of the stamp duty hike.
The government introduced a 3% stamp duty increase on second homes on 1 April this year to curb the buy-to-let market and free up property for first-time buyers.
In the run-up to the stamp duty hike there was a boom in borrowing as buyers brought forward transactions to beat the deadline which was then followed by a dip in May.
Sam Mitchell, Rightmove’s head of letting, said: “Investor activity has bounced back following the stamp duty changes, though some agents report that many investors are looking to knock sellers down on their asking prices to make up for the additional stamp duty they now need to pay. New rental supply has held up despite concerns that the stamp duty changes would lead to less fresh stock.”
The lull in activity did not lead to a reduction in new rental supply that some experts were predicting, with newly-marketed rental properties up 6% in the third quarter compared to 2015. London continues to lead the way for new supply, with a year-on-year increase of 15% over the same period.
Rightmove said that the rush to beat the stamp duty increase had paid off for investors buying in seaside towns.
The top 10 outside London revealed that a number of seaside towns are offering strong total returns, including Southend-on-Sea (14.7%), St Leonards-on-Sea (13.7%), Clacton-on-Sea (12.4%) and Westcliff-on-Sea (11.8%).
Mitchell said: “Once again Essex and other commuter spots are offering investors the best total returns, and those looking at long-term investments are seeking out areas with upcoming improved transport links.”
Highest total returns outside Greater London
|
Area
|
Average asking price
Q1 2016 |
Average asking price
Q3 2016 |
Average total rent collected
|
Total return on investment
|
| Southend-On-Sea, Essex | £187,515 | £210,353 | £4,816 | 14.7% |
| St. Leonards-On-Sea, East Sussex | £155,627 | £173,073 | £3,929 | 13.7% |
| Colchester, Essex | £164,915 | £183,010 | £4,312 | 13.6% |
| Lowestoft, Suffolk | £129,197 | £143,151 | £3,081 | 13.2% |
| Corby, Northamptonshire | £112,253 | £123,125 | £3,514 | 12.8% |
| Clacton-On-Sea, Essex | £154,022 | £169,161 | £3,942 | 12.4% |
| Waltham Cross, Hertfordshire | £267,262 | £292,553 | £6,502 | 11.9% |
| Westcliff-On-Sea, Essex | £203,860 | £223,268 | £4,732 | 11.8% |
| Wellingborough, Northamptonshire | £124,484 | £135,562 | £3,619 | 11.8% |
| Hastings, East Sussex | £159,869 | £174,747 | £3,956 | 11.8% |
What Mortgage has teamed up with London & Country to offer you expert advice on the right mortgage deal.
Whether you’re buying a new home, remortgaging to a new deal or buying an investment property, L&C can help – and you’ll pay no fee for their advice. To find out more, click here.
