Buy to let investors switching to cheaper homes says ...

Average price for a property paid by investors in April fell by 8.3 per cent from £194,000 a month earlier to £178,000 says Countrywide - an indication that landlords are seeking out cheaper homes to minimise their stamp duty liability.

London saw the biggest change in behaviour with landlords buying homes costing 16.4 per cent less than the previous month. On average investors paid just £365,000 in April compared to £436,000 in March.

This is down to the introduction of the three per cent stamp duty surcharge on buy to let and second homes.

The letting agency group says those generally lower priced markets saw a less sharp response from landlords with average prices paid actually rising month-on-month in the north east of England and in Yorkshire.

Average rents have increased 2.0 per cent over the last year, leaving the typical UK rent at £932 pcm - this rental growth is now half its level of a year ago.

“April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new three per cent charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill” says Johnny Morris, research director at Countrywide.

“There’s early signs that first time buyer numbers are increasing in as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend” he says.