Countrywide says £28 billion worth of home sales were completed in March ahead of the stamp duty surcharge deadline, a 76 per cent increase on the previous year.

Countrywide – which is assessing the whole market, not just its own transactions – says landlords accounted for 23 per cent of all homes sold in March compared to 13 per cent in the previous year. In the two weeks running up the deadline, half of all homes sold were to landlords.

This surge in landlord activity means more housing has been made available for tenants to rent. Some 22 per cent more homes were brought to the rental market in quarter one of 2016 than in the same three months 2015; this has contributed to lower rental growth rates compared to last year.  

The percentage increase in the number of homes to rent has not been matched by the increase in the number of prospective tenants looking for a home which has put further downward pressure on rents. The number of tenants registering was up 16 per cent in the first three months of 2016, compared to the same time last year.

London experienced the largest increase in new rented homes, up 40 per cent on the first quarter of last year; but London has lower growth of tenant numbers, up only eight per cent over the same period. This has resulted in a rapid deceleration in rental price growth with rents in Greater London growing 2.9 per cent in March, less than half the 7.4 per cent recorded in 2015.  

The average UK rent rose 3.4 per cent in the year to March 2016. Rents grew fastest in the East of England, increasing by 8.5 per cent over the year.  Growth in the East of England was driven by increasing numbers of new tenants registering in the first three months of the year, up 34 per cent year on year, the highest increase of any region.

“Quite at odds with the intentions of the policy, the first measurable effect of the introduction of the new stamp duty rate has been to increase the number of homes owned by landlords, although this will likely be a temporary effect as we see reduced investor activity in future months” says Johnny Morris, research director at Countrywide.

“The increase in supply of homes to rent from landlords bringing forward purchases seems to have taken the edge off rental growth.  A similar increase in tenants looking for a home to rent though would indicate this may not persist.  The large number of sharers, and people living with parents means there is a big store of pent up demand in the rental market.”