With the new stamp duty charges just weeks away, much of the conversation has been focused on the plight of the UK’s landlords. However, there is another group that will undoubtedly be looking at the situation with great interest – the four million people who are currently living in privately rented accommodation. For them, the media’s projection of mass property sales and skyrocketing rents is sure to be a concern, but will this doomsday scenario really come to pass? 

Supply, supply, supply

It seems that the huge property sell-off that has been predicted by some is unlikely, but the new charges will certainly do nothing to ease the problem of supply, especially in the capital. The amount of households in London that are now renting privately is over double what it was just a decade ago, and demand is growing.

The introduction of an additional 3% charge on stamp duty for smaller landlords will surely make those looking to enter the buy-to-let market pause before making the leap, but it is unlikely to stop the determined investor. The real concern for prospective landlords will be fighting off larger concerns that already hold 15 or more properties, making them exempt from the stamp duty increase.

This exemption will enable such companies to pay more for desirable property, thus pushing the smaller investor to one side but, conversely, other property may drop in value as buyers seek ways to claw back the 3% hike. For tenants, however, there is a different concern altogether.

High rents look set to go higher still

Despite rents being at an all-time high, they look almost certain to keep rising for the foreseeable future as the amount of people searching for rented accommodation increases. As we’ve already touched upon, most landlords will be looking to recoup at least some of the additional 3% in stamp duty that they will be charged from April onwards, which all adds up to a pretty dismal outlook for renters going forward.

While it is true that landlords will indeed be hit by the incoming changes, to think that they will be the ones who ultimately shoulder the cost would be foolish. Being a landlord is a business, so it stands to reason that these charges will be passed down the line. The buck will likely stop with those who pay the rent, unfortunately. 

Finance may not be the issue it’s being made out to be

Funding, too, has been wearily commented on, with national newspapers bemoaning what the increases will mean for landlords looking to raise finance for their purchases in a post-stamp-duty-rise world. However, since the financial collapse of 2007, small business owners have had to manage with next to no help from the conventional banking system and alternative lending has boomed.

Existing landlords will, therefore, not have as many issues with finance as is being reported. The alternative market is constantly introducing new funding choices, and landlords will be well catered for moving forward. Those who wish to enter the buy-to-let market for the first time from April onwards will also find a way over the new barriers to entry, should they be canny and determined enough to do so. That being said, the incoming changes will certainly slow the amount of private landlords entering the market over the final three quarters of 2016.

So, while the mainstream media concentrates on what the changes mean for the nation’s landlords, the real losers look set to be the tenants. As much of the rental market has been fuelled by smaller landlords over the last 20 years, the extra stamp duty expense could prove to have horrendous consequences for the supply chain. and that is far from good news for those who are yet to get their feet on the property ladder. 

The chancellor stated in his budget that, ‘solving the housing crisis was a top priority’, but should the dream of bringing home ownership back to the masses really come at the expense of those who wish to rent? 


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