Fears buy-to-let landlords will drive up house prices ahead of stamp duty hike

A hike in stamp duty tax, which comes into effect this April, is expected to add another 3% to a property's purchase price

A hike in stamp duty tax, which comes into effect this April, is expected to add another 3% to the purchase price (Getty Images)

A surge in demand from buy-to-let investors is driving up house prices ahead of changes to stamp duty.

Nearly 75 per cent of house builders said they expect to see a boost in sales to buy-to-let investors in the coming months, according the Residential Market Survey by the Royal Institution of Chartered Surveyors.

New-buyer enquiries rose by 10 per cent for ten month in a row, the survey found.

A hike in stamp duty tax, which comes into effect this April, is expected to add another 3 per cent to the purchase price.

“With buy-to-let investors rushing to get into the market ahead of the stamp duty hike, the near-term pressure on prices is if anything intensifying,” said Simon Rubinson, RICS's chief economist.

The number of homes increased slightly over the past two months, the report found.

But the rise in number of properties has “done little to alleviate the demand supply imbalance for the time being,” RICS said.

Stock remains low, with 46 properties available per branch, up from 44.5. Stock is down 21 per cent on last year.

London saw a significant lift in properties coming to the market in January but across the UK the number of new properties remained flat.

George Osborne’s decision to raise stamp duty for buy-to-let landlords will cost tenants an extra £55 a month in rent, according to a December report by Kent Reliance, a banking service.

Osborne announced an additional 3 per cent stamp duty on second homes and buy to let properties in his Autumn Statement, adding thousands in tax.

A property worth £175,000 would have cost £1,000 in stamp duty this year but will cost £6,250 from next April.

“Tinkering with the cost of lending by subsidising first time buyers or penalising landlords is not the way to make housing more affordable. The only way to do that is to build more homes,” said Andy Golding, CEO of OneSavings Bank, which owns Kent Reliance

The cost of an average British property hit a record £208,000 in December after prices jumped by another 9.5 per cent in 2015. Prices were pushed upwards by a “substantial” gap between supply and demand, according to the latest figure by Halifax, UK’s biggest lender.