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High Stamp Duty Rates Push London's Investors North

Average SDLT bill costs £24,600 for property in London, 78% higher than outside the capital

17% fewer landlords living in London purchased property in the capital since 2015

London-based landlords are increasingly purchasing properties in the North and Midlands to boost their buy-to-let returns.

According to Hamptons International, buy-to-let investors that live in London historically invest in properties in the capital.

However, the proportion of those living in the capital purchasing buy-to-lets in London has fallen by 17% since 2015, prior to the introduction of the Stamp Duty surcharge on additional property purchases.

Over the last 12 months, more than half (59%) of London-based landlords purchased outside the capital, 34% more than in 2010.

Stamp Duty bills for London properties costed landlords on average £24,600 over the last year, compared to just £5,330 beyond the capital; a 78% increase, with the data suggesting many of London's investors are buying beyond the capital to avoid the higher rates.

According to the data, the Midlands and North are the most popular destination for London-based investors, with 34% purchasing a buy-to-let in these regions in the last 12 months, some 20% more than prior to the Stamp Duty surcharge.

Additionally, the Hamptons International data shows that rents in Great Britain increased by the year to March by an average of 1.9%, driven by a 3.7% surge across London, with every region except for Scotland recording positive rental growth.

Commenting on the figures, Aneisha Beveridge, Head of Research at Hamptons International, said:

“April marks the three-year anniversary of the stamp duty surcharge introduction for second homeowners. Following the tax hike, landlords have been adapting their strategy to find new ways to make their returns.

“Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.”

Meanwhile, HomeLet’s latest Rental Index suggests that rental growth in the UK is accelerating as a result of the impending Tenant Fees Act, which comes into effect from June the 1st.

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