Buy To Let property purchases plummet as tax threats mount

The number of buy to let property purchases in the UK fell 14% from 224,700 in 2022/23 to 193,700 in the year ended June 30 2024.

The figure comes from the chartered accountants and business advice company Lubbock Fine, which has analysed government data.

This has meant that purchases of BTL properties have fallen to their lowest levels since the government introduced the higher rate of stamp duty on additional dwellings in 2016. At its peak, 287,200 purchases were made in the year to June 2021

This fall in BTL purchases has partly been driven by the sharp rise in interest rates on BTL mortgages but also by a series of measures introduced over the last few years that have made BTL property less attractive from a tax point of view.

Those changes include preventing landlords from deducting mortgage interest costs from their income; reducing the expenses landlords can claim against tax bills for ‘wear and tear’ on properties; cutting Private Residence Relief, which increased the amount of Capital Gains Tax landlords must pay when selling a property that used to be their main home; and of course introducing an additional 3% rate of Stamp Duty on sales of buy to let properties.

Says Andy Noton, partner at Lubbock Fine: “We’ve seen a marked decrease in purchase activity for rental properties.

“Concerns that the new Government will increase CGT at the next Budget or add to the red tape for landlords is encouraging more landlords to exit the market and fewer to buy.”

“However, a continued fall in mortgage rates could change all that. Rents have continued to climb so a reduction in finance costs could suddenly improve the economics for landlords.”