HMRC data shows 7% rise in 2013-14 but figure likely to be higher after recent buy-to-let lending surge
The rapid pace of growth in buy-to-let investments has been illustrated by new figures showing the number of landlords rising by 7% in 2013-14 to reach 1.75 million.
Figures from estate agent ludlowthompson based on data from HM Revenue & Customs showed 1.75 million people declared income from property during the year, up from 1.63 million in 2012-13, as they chased returns on their cash that outstripped other investments.
Landlords banked a combined £14.2bn in net income from their rental properties during the year, up from £13.1bn the year before.
The HMRC figures are the latest data on landlord numbers, which are likely to have increased significantly since. Buy-to-let lending has boomed as cheap mortgages and rising rents, combined with low savings rates, have made property attractive to investors. Ludlowthompson said that over the past year the price of property in London had risen by 13.9% – a period when the FTSE 100 fell by 8.8%.
Changes to stamp duty introduced on 1 April increased the upfront cost of buying property, adding a 3% surcharge on second homes. From 2017, the ongoing cost will start to rise for landlords who pay the higher rate of tax as relief on mortgage repayments starts to be withdrawn.
The firm said the surge in borrowing by landlords ahead of the stamp duty change suggested property remained popular: figures from mortgage lenders showed a 226.1% year-on-year rise in the number of purchase loans taken out by landlords in March. The chairman of ludlowthompson, Stephen Ludlow, said: “Investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments.
“Buy-to-let investments are a highly popular alternative to the volatility investors often risk when investing in the stock market.”
The National Landlords Association has suggested that investors will make some changes to mitigate the new rules. It said last week that the profits of six in 10 landlords would fall after the removal of some tax relief. In order to recover costs, one in five landlords could stop renting to higher-risk tenants, such as those on housing benefit.
It said the removal of mortgage interest relief, combined with the government’s benefits freeze and the fall in social housing, would “create a perfect storm whereby some tenants will struggle to find any sort of housing at all”.
SOURCE: Guardian.co.uk
