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The flurry of buy-to-let activity before the stamp duty deadline helped to push annual returns for landlords up 12.2% in March, according to new data.
Your Move and Reeds Rains said this is up from February’s figure of 10.7% and is the fastest annual rate of return for seen since November 2014.
This means that the average landlord in England and Wales has seen a return of £22,135 over the last twelve months.
Adrian Gill, director of lettings agents Your Move and Reeds Rains, said: “In the short term, there has also been a scramble to buy property before the deadline. As a result, a flurry of interest from property investors has boosted values, and delivered a bonus for existing landlords through faster capital growth.
“In search of political points, the Chancellor would do better to help tenants rather than punish landlords – but the most ironic part of the new tax regime is the additional bonus to the wealth of current landlords.”
Rental inflation up 3%
Average rents across England & Wales now stand at £791 per month as of March 2016, 3.0% higher than the same point last year – an extra £23 per month for the average tenant.
The highest rent increases were in the East Midlands, up 8.5% on March last year to an all-time record high of £613 per month. This is followed closely by the West Midlands with a 6.7% annual rent rise which takes he average rent in the West Midlands region to a £597 per month.
London is in third place in terms of annual rent rises, up 4.6% from the same point last year. However at £1,231 the capital’s average monthly rent remains below the all-time record of £1,301 set six months ago in September 2015.
Wales and the North East saw annual rent falls, both dropping by 2.2% since March last year. This takes rents in Wales to £551 per month and rents in the North East to £507 per month in March 2016.
“New tax changes intended to benefit owner-occupiers are now making it more expensive to become a landlord, at least for the time being. Ultimately this will only punish tenants and aspiring first-time buyers – driving out buy-to-let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them,” said Gill.
“This month’s new stamp duty surplus has driven an extra wedge between those aspiring landlords planning to invest in additional homes to let, and those existing landlords who have already built up their portfolios. That difference will not last for long. But by making it more expensive to invest in property, it will hamper the healthy growth of the private rented sector,” he added.