New figures show how effective the stamp duty holiday was in stimulating buy to let - and how similar measures could keep the sector vibrant in the future.
London, the South East and the South West led the jump in buy to let house purchases during the Stamp Duty holiday, an analysis by Paragon Bank reveals.
Comparing the period when landlords received the full three per cent Stamp Duty discount – July 2020 to June 2021 – with the last comparative period not impacted by Covid, which was July 2018 to June 2019, showed that the number of buy to let purchases increased by 52 per cent in London.
Paragon’s analysis of industry data showed the South East recorded a 49 per cent increase in purchase completions, whilst the South West saw buy to let purchases rise by 41 per cent.
At the other end of the scale, the West Midlands saw the smallest increase with transactions rising by 12 per cent whilst Wales and Scotland - which had different housing stimulus measures, instead of England’s stamp duty holiday - rose by just eight and one per cent respectively.
The regions that saw the greatest increases were those where the Stamp Duty saving was greatest based on average house prices. Landlords could save up to £15,000 in Stamp Duty costs during the holiday period.
However, they were also the regions that saw the greatest falls in house purchases after the Stamp Duty three per cent surcharge for buy-to-let and second homes was introduced in April 2016.
Between 2015 – the last year before the surcharge was introduced – and 2019, buy to let purchases fell 55 per cent in London and 51 per cent in the South East, whilst the South West decreased 41 per cent.
Paragon Bank managing director of mortgages Richard Rowntree says: “The impact of the Stamp Duty saving on regions where house prices are generally higher is clear to see, with transactions in London and the South increasing by approximately half. There were also strong increases in the South West, North East and East Anglia.
“Despite this, tenant demand still outweighs supply in large swathes of the country, which is leading to record levels of rental inflation, plus transactions still remain significantly below the level experienced before the Stamp Duty surcharge was introduced in 2016.
“As the government pursues its Levelling Up agenda, it needs all facets of the housing market to be working effectively, including a sufficiently sized private rented sector to facilitate labour market mobility and provide good quality homes for those who cannot or don’t want to own a home.”