LONDON — Tax changes mean landlord investment in London has plummeted since last year, while Manchester is rapidly catching up as the most attractive place for the UK’s buy-to-let landlords, according to new data from UK Finance.
The industry body found that landlord investment has fallen by over 50% since April 2016, when the government hiked stamp duty for buyers of second homes.
In the first quarter of this year there were just 1,126 mortgaged purchases by buy-to-let landlords in London, compared to an average of 2,500 in 2014 and 2015.
The capital’s property market has been damaged by uncertainty surrounding Brexit, inflated house prices, and mortgage constraints. Rents are predicted to fall by between 1 and 2%, according to analysts Hometrack, meaning lower returns for buy-to-let investors.
Manchester was also affected by the tax hikes, but much less significantly. There were 840 mortgaged buy-to-let purchases there for the first three months of 2017, compared to an average of 1,000 in 2014 and 2015.
Manchester is experiencing a residential building boom, and is an attractive investment for landlords because it offers higher average yields than London. The market has been boosted by a growing student population and the BBC’s huge MediaCityUK development.