London landlords leave market amid heavy tax burden

Homes purchased as rentals dropped to 12% from 20%

TRD New York /
May.May 12, 2017 08:11 AM

Two major tax changes are pushing landlords in London to rethink their investments.

Since last year, those purchasing second homes have paid an extra 3 percent tax; as of last month, landlords are facing added costs in the form of reduced tax relief for rental income.

“If I thought stamp duty was bad, the tax relief issue really was the nail in the coffin,” landlord Jennifer Pickford told Bloomberg. “It just makes the whole exercise unprofitable and pointless.”

Pickard isn’t alone: Landlords have retreated from the market, with homes purchased as rental properties dropping to 12 percent of the market in February compared to 20 percent a year earlier, according to brokerage Hamptons International. That number jumped to 29 percent in March, however, as landlords rushed to make purchases before the tax took effect.

With more rentals available, the average asking rent in London fell 4.3 percent in the first quarter to $2,490 a month, according to Rightmove Plc., a property website.

Landlords with rental income of 15,000 pounds — or $19,273 dollars — who pay 40 percent tax will see profits fall 86 percent in 2020, according to mortgage broker John Charcol.

“It’s no surprise that investors are now buying fewer rental properties in London and some are even leaving the market altogether,” said Lucian Cook, head of residential research at Savills.

One reason to stay? London home values are up 86 percent since 2009, and are now the highest level on record. It now costs buyers 14.2 times their salary to buy their place. [Bloomberg] — E.B. Solomont


Related Articles

arrow_forward_ios
(Images courtesy of Victor Group)

The Getty condo chops prices up to 53%

The Getty condo chops prices up to 53%
442 Union Street and 257 Berry Street (Google Maps)

Brooklyn’s luxury market reaches new pandemic high

Brooklyn’s luxury market reaches new pandemic high
Marwan Kheireddine (inset), Jennifer Lawrence and 400 East 67th Street (Getty, Compass, BDL Accelerate)

Jennifer Lawrence’s Upper East Side PH sold at 37% loss

Jennifer Lawrence’s Upper East Side PH sold at 37% loss
Senate Minority Leader Chuck Schumer and Senate Majority Leader Mitch McConnell (Schumer by Tasos Katopodis/Getty Images; McConnell by Ting Shen/Xinhua via Getty)

Schumer v. McConnell on SALT: Who’s gonna give?

Schumer v. McConnell on SALT: Who’s gonna give?
111 Leroy Street and 817 Fifth Avenue (StreetEasy, Google Maps)

Luxury deals plummet in Manhattan — again

Luxury deals plummet in Manhattan — again
From left: Jared Kushner, 715 Park Avenue, Deutsche Bank CEO Christian Sewing, and Rosemary Vrablic (Credits: Kushner by BRENDAN SMIALOWSKI/AFP via Getty Images; 715 Park via Google Maps; Sewing by by Thomas Lohnes/Getty Images; Vrablic by PAUL LAURIE/Patrick McMullan via Getty Images)

Apartment sale to banker for Trump and Kushner probed

Apartment sale to banker for Trump and Kushner probed
Renderings of 17 Jane Street and Edward J. Minskoff (Renderings via Kristen Krajewski; Minksoff by Patrick McMullan/Patrick McMullan via Getty Images)

Minskoff sells first condo in West Village project for $22M

Minskoff sells first condo in West Village project for $22M
Central Park South saw its median sales price for condos nosedive to $1.5 million (iStock, photo by Gary Hershorn/Getty Images)

Here’s where Covid hit Manhattan condo market hardest

Here’s where Covid hit Manhattan condo market hardest
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...