Buy-to-let investors 'rushing' into property market ahead of stamp duty increase
Buy-to-let investors are flooding into the property market before they are hit by a stamp duty increase, surveyors have reported.
The Royal Institution of Chartered Surveyors (Rics) said the level of new buyer enquiries increased for the tenth month in a row in January as the upward pressure on house prices intensifies.
It said feedback from its members suggests the recent surge in demand is due to a rush of buy-to-let investors looking to snap up properties before a three percentage-point increase on current stamp duty rates comes into force for these investors from April.
And three-quarters (74%) of surveyors expect to see a further increase in buy-to-let purchases before the changes kick in.
The UK housing market also saw a pick-up in the supply of homes in January - for only the third month in the last 18.
But Rics said this is not enough to meet the growth in demand from buy-to-let investors - which is helping to push house prices higher.
London in particular saw a significant increase in the number of properties coming to market in January, although elsewhere the number of new properties was much "flatter", the report said.
Even with the recent improvement to supply, a net balance of 49% of surveyors reported prices rising rather than falling in January.
Looking ahead, house prices are generally expected to continue rising in the next 12 months, with a balance of 72% of Rics members expecting prices to increase rather than decrease.
Generally, stock remains low, it said, with an average of 46 properties per branch, down by 21% compared with a year ago.
Concerns have been raised that after the stamp duty hike kicks in, landlords will be put off investing in new properties, which could have the effect of pushing up rents as competition between tenants for properties heats up amid a lack of supply.
Rics found that generally, surveyors expect rents across the UK to increase over the next 12 months and the coming five years.
Simon Rubinsohn, chief economist at Rics, said: "With buy-to-let investors rushing to get into the market ahead of the stamp duty hike, the near-term pressure on prices is if anything intensifying despite a higher level of supply.
"How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite.
"Against this backdrop, it is perhaps not surprising that the key Rics indicators point to further rent as well as house price increases."
A Treasury spokesman said: "We have reformed stamp duty to help create a level playing field and help first-time buyers get on the housing ladder. This policy is not expected to have an effect on rent levels."
