Have Landlords Caused the Recent Property Price Slump

We typically see a Autumn bounce and a slight uplift in transactions at this time of year but new data released from Rightmove shows that house prices in the last month have increased by less than 1%, whereby there has historically been a 1.6% rise during this month for the past 5 years.

Many people would assume that all the negative press about the Brexit deal or No-deal situation is to blame but analysts have identified that a lack of activity in the Buy-to-let market has caused this recent slump.

Why are Landlords to Blame

In recent times Landlords have been hit hard with a double whammy. Firstly, there is now a 3% extra stamp duty to pay on second properties, this has been in place since 2016. Additionally, there have been significant changes made to the amount of income tax that Landlords will have to pay on their rental income. This comes into place next year and because of this it’s believed that many Landlords are now deterred from further expanding their portfolio or even entering the market in the first place. At Direct House Buyer we previously predicted that Landlords will probably stop buying houses due to the severity of the new tax rules, there are certainly many Landlords who feel that they have been punished.

It appears that the fiscal measures put in pace by the government are actually working so one would assume that the UK government are probably quite proud of themselves. Also it seems that there hasn’t been a panic exodus whereby Landlords have been looking to sell their house quickly, it’s just a matter of their being less activity.

This is Positive News for First Time Buyers

Traditionally, Buy to Let Landlords have been the first to blame for pushing first time buyers out of the market, they have often been buying at the lower end of the market so that they can maximise rental yields, causing an increase in competition for first time buyers and it simply hasn’t been fair. Particularly, as the lending criteria for obtaining a Buy to Let mortgage is based on the merits of what income the property can generate. Compared to a First time buyer mortgage being based on the income they generate from a good honest living. The governments Help to Buy Scheme seems to also be a success and as of November last year there is no stamp duty to pay for first time buyers purchasing a home that’s less than £300,000.

It’s become a bit of a Robin Hood steal from the rich and give to the poor scenario, but this has been understandably due as many blame the hysteric rush to become landlord and the ease of doing so for being the reason as to why house prices are so high, particularly when compared to the average income.

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