As the new buy-to-let stamp duty surcharge takes hold, and landlords look for ways to offset the additional expenditure they are incurring on new purchases and take the sting off the proposed reduction in tax relief that will come into effect from 2017, Londoners renting in the capital could be facing an average increase in annual rental charges of £5,3281 by 2021, equating to an average monthly rent of £1,965 – up from today’s current average of £1,521.2
Claire Hodges, who lets a studio flat in Greenwich, has found her rent has increased already this year. She said:
“I was originally paying £725 per month when I signed my contract last year however in February I was notified this would be increased by another £25 per month to £750 from April. It may not sound like a lot, but it certainly makes a difference to me.
“Unfortunately it’s difficult to get anything cheaper as rent seems to be high everywhere and prices will continue to go up. Buying for me is completely impossible given the sale prices for similar properties in the area so I have no alternative but to accept the fact that my household overheads are increasing and are likely to rise again next year.”
Stewart Pope, CEO at Perrys Chartered Accountants that has offices based in the City and Mayfair, said:
“Those investing in property for the rental market who would have originally been paying £7,500 in stamp duty on a property valued at £350,000, will now have to pay £18,000 – a significant difference at over double the previous charge.
“This has been further compounded by the proposed reduction in tax relief that buy-to-let property owners can claim on their mortgage interest from their rental income, that will be phased in from 2017 and will be in full force by 2020.
“The natural result is that landlords will need to look for ways to recover these sums in the long term, particularly if they need mortgages to secure new properties.”