UK rental property prices dip as tax hits, overall prices up

04 Apr, 2016

LONDON – Asking prices for rental properties in England and Wales have fallen, hit by the introduction of a new tax, but prices in the housing market as a whole have continued their rise, online property listings firm Rightmove said.

Asking prices for properties typically sought by buy-to-let investors and first-time buyers – with up to two bedrooms – fell by 1.4 percent in the four weeks to April 9.

By contrast, in the market as a whole, prices rose by an average of 1.3 percent, or £3,843, to hit a new record high of £307,033, Rightmove said.

On April 1, Britain added a new surcharge to stamp duty, the tax on buying property, requiring payment of an extra 3 percent for homes bought by investors to be rented out. The government says the aim is to help first-time homebuyers get into a market that has become increasingly dominated by landlord investors.

Some economists have said the new tax risked causing a broader fall in prices in the housing market.

But Rightmove said a rush to buy properties for rent before the deadline had the knock-on effect of driving demand in other areas as owner-occupiers of small homes took advantage of the rise in prices in recent months and sought to trade up.

“Interestingly there has been a stamp duty double-whammy effect pushing up prices in these higher sectors too,” Rightmove director Miles Shipside said.

Asking prices in London saw the smallest rise amongst the regions of England and Wales, rising by 0.3 percent from the previous four-week period. Some estate agents reported a shift in interest away from the city and into its suburbs and South East England.

Rightmove said it measured the asking prices of nearly 115,200 properties put on sale from March 13 to April 9. -Reuters