The number of buy-to-let (BTL) property purchases in the UK fell 25% from 240,800 in 2022/23 to 192,100 in the year ended March 31 2024, says chartered accountants and business advisers Lubbock Fine.
This fall in BTL purchases has partly been driven by the sharp rise in interest rates on BTL mortgages but also by a series of measures introduced over the last few years that have made BTL property less attractive from a tax point of view.
Those changes include:
- Preventing landlords from deducting mortgage interest costs from their income, increasing their tax bills
- Reducing the expenses landlords can claim against tax bills for ‘wear and tear’ on their properties
- Cutting Private Residence Relief, which increased the amount of Capital Gains Tax landlords must pay when selling a property that used to be their main home
- Introducing an additional 3% rate of Stamp Duty on sales of buy to let properties
With the new Labour government signalling more renter-friendly legislation – for example putting restrictions on non-fault evictions – these concerns are likely to continue.
Says Andy Noton, Partner at Lubbock Fine “We’ve seen a marked decrease in purchase activity for rental properties.”
“Concerns that the new Government will increase CGT at the next Budget or add to the red tape for landlords is encouraging more landlords to exit the market and fewer to buy.”
“However, a continued fall in mortgage rates could change all that. Rents have continued to climb so a reduction in finance costs could suddenly improve the economics for landlords.”
Purchases of Buy-to-Let properties continue to fall
*Based on HMRC data on the purchases of property subject to Higher Rate of Stamp Duty on Additional Dwellings. Includes buy-to-let properties, holiday homes and other second properties.
