17 July 2018
Hamptons Rental Index – July 2018
Number of homes let by company landlords doubles following new tax relief laws
- 18% of properties let in H1 2018 were owned by a company rather than an individual. This is up 4% compared to H1 2017 and 8% higher than in H1 2016
- One in four (25%) of homes let in Yorkshire and the Humber in H1 2018 were owned by a company landlord, followed by the North West (20%) and London (19%)
- London had the highest proportion of company owned lets in 2017, but has since fallen back to third place
- The average cost of a new let in Great Britain rose to £956 pcm in June 2018, but rental growth slowed to 0.7% down from 1.3% in May
The proportion of homes let by a company landlord rather than an individual rose to 18% in H1 2018, the highest proportion since our records began in 2010 ( see table 1). This is up 4% on H1 2017 and up 8% since H1 2016 when just one in ten homes were let by a company landlord.
TABLE1: Proportion of homes let by a company landlord:
The numbers have been steadily rising since H1 2015 when the Chancellor announced changes to tax relief on rental properties in the 2015 Spring Budget. The changes meant that it became more tax efficient, in some cases, for landlords to own their buy-to-let portfolios through a company rather than hold as a personal asset.
Yorkshire and the Humber interestingly had the highest proportion of rented homes owned by a company landlord. One in four (25%) homes let in Yorkshire and the Humber in H1 2018 were owned by a company landlord, followed by one in five (20%) in the North West and 19% in London (table 2). Last year, London topped the list but has since fallen back.
TABLE2: Proportion of homes let by a company landlord by region:
Company landlords are more likely to rent out cheaper homes than individual landlords. Over a third (35%) of homes let by a company landlord cost under £500 pcm, compared to 19% of homes let by individuals (table 3), whilst individual landlords had a higher proportion of homes with a rental value of between £500-1500. One in ten rented homes owned by a company landlord were registered overseas.
TABLE 3: Rented homes by price band in 2018
The average cost of a new let in Great Britain rose to £956 pcm in June 2018, an increase of 0.7% (table 4). Rents rose the most in Wales, up 4.1% year-on-year, followed by the East (2.3%) and the Midlands (2.2%). Rents in the North were the same as they were this time last year which is positive given that they had fallen in the previous 2 months.
TABLE4: New Lets pcm – 2017 vs 2018
Commenting Aneisha Beveridge, Analyst at Hamptons International, said:
“The number of rented homes owned by company landlords continues to rise. Nearly one in five homes let so far this year were owned by a company landlord, almost double the proportion in 2015, before the tapering of mortgage interest tax relief changes were announced. Companies are generally taxed more favourably, so in many cases landlords can make cash savings by operating through a company rather than as an individual.
“Rental growth slowed in June, falling below 1% for the first time in seven months as the shortage in stock begins to level out. The lull in landlord purchasing activity following the stamp duty surcharge for second homes appears to have bottomed out as investors find new ways to make their returns.”