Buy-to-Let Landlords Resilient Despite Increased Tax Burden, Data Shows

Landlords are showing unexpected resilience to the government’s latest tax hikes, according to new analysis suggesting that buy-to-let investors are maintaining a steady presence in the property market.

Data from estate agency Hamptons, based on transactions recorded by its parent firm, Countrywide, indicates that landlords accounted for 10.7% of accepted property offers in Great Britain this November, an increase from the 2024 year-to-date average of 10.2%. This trend contradicts industry concerns that recent tax reforms would sharply reduce buy-to-let activity.

In last month’s Autumn Statement, Chancellor Rachel Reeves announced an increase in the stamp duty surcharge for second-home and buy-to-let properties from 3% to 5%. This change raised the tax burden significantly, with an investor purchasing a £500,000 property now paying an additional £37,500 in stamp duty—£10,000 more than under the previous rate.

Despite fears of a sharp decline in buy-to-let investments, the data suggests that landlords are adapting to the changes rather than retreating from the market.

“Early signs suggest that new landlords have shown relative resilience to yet another cost increase,” said Aneisha Beveridge, head of research at Hamptons. “While the number of buy-to-let purchases remains muted by historic standards, their numbers have not collapsed.”

While buy-to-let activity has fallen compared to previous years, the sector remains active, especially in regions with more favorable conditions. In the North East, where properties are more affordable, landlords accounted for 18.4% of purchases in November. Even in London, where high property prices and lower rental yields present challenges, landlords still represented 14.7% of transactions.

The current figures contrast sharply with activity levels in 2015, when private investors accounted for 16% of all UK property purchases. Hamptons predicts that 2024 will close with approximately 113,630 new buy-to-let deals—40% fewer than eight years ago.

Meanwhile, rental growth, which has weighed heavily on tenants in recent years, appears to be moderating. Average rents rose 2.6% year-on-year in November, bringing the average monthly rent across Britain to £1,382. This slower rate of growth offers some relief to tenants after years of steep increases.

The National Residential Landlords Association (NRLA) continues to warn that the reduction in landlord numbers since 2016 has exacerbated housing pressures, with official data showing a rise in homelessness cases. Between April and June 2024, 7,130 households required council support—up from 5,400 between October and December 2023.

For now, landlords appear to be recalibrating their strategies, focusing on areas with higher yields and absorbing the added costs, signaling that the sector is adapting rather than retreating in the face of new challenges.