Jump in two-bed flats for sale after buy-to-let clampdown

More properties have become available for first-time buyers and prices have stopped rising, in what the property website Rightmove says is the first evidence that the chancellor’s clampdown on buy-to-let is working.

Rightmove said there had been a 6.6% jump in “fresh-to-the-market” two-bed flats over the past year, the most sought-after sector in the first-time buyer market.

Availability of two-bed flats is now at its highest since 2007, according to Britain’s biggest property portal, which suggested some buy-to let landlords may be selling up before changes to tax relief and stamp duty come into force.

Prices for two-bed flats are static. Rightmove director Miles Shipside said: “With the monthly price increase in this sector at a near standstill (+0.1%, +£209), this suggests that some of the dynamics of the changing tax regime for buy-to-let investors are starting to play out sooner than expected.

“For several years buy-to-let investors have been enticed by high tenant demand and attractive returns, but as their window of opportunity starts to close it already appears to be opening wider for first-time buyers.”

In the summer the chancellor, George Osborne, cut tax reliefs for buy-to-let landlords, and in the autumn statement he increased stamp duty on investment properties.

Meanwhile, prices in the mainstream property market continue to rise. Rightmove said the price of property coming to market was up by 0.5% (+£1,509) in January compared with December. Demand as measured by visits to the Rightmove website in the first working week of 2016 was up by 21% on the same period in 2015.

There is little sign of relief for struggling tenants, with separate data showing rents are rising. The Countrywide lettings group said the average rent in the UK rose by 3.1% in 2015, with the east of England showing the highest growth.

However, Countrywide’s figures suggest that in London rents have hit a ceiling of affordability. It said rents in the centre of the capital rose just 0.5% in 2015, and that the number of under-25-year-olds able to rent privately was tumbling.

“As rents continue to increase and outpace earnings in the capital, younger people and those in lower income brackets have found it harder to remain in the capital, particularly in central areas,” the group said.

Countrywide research director Johnny Morris said: “2016 looks to be a complicated year for landlords. The additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behaviour.

“With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents, although any rises will be tempered by affordability pressures.”