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London rents set to rise by over £5,000 by 2021

London rents set to rise by over £5,000 by 2021

Landlords in the capital could see the rental value of their London-based buy-to-let properties soar over the next few years, as more property investors pass on higher tax bills to their tenants.

As the new buy-to-let stamp duty surcharge takes hold, and landlords seek fresh ways of offsetting the additional expenditure they are incurring on new buy-to-let acquisitions and take the sting off the proposed reduction in tax relief that will come into effect from next year, the Royal Institution of Chartered Surveyors forecast that rents in the capital will rise by an average of £5,328 by 2021.

If accurate, this would equate to an average monthly rent of £1,965, up from today's current average of £1,543, according to data provided by HomeLet

Stewart Pope, CEO at Perrys Chartered Accountants, based in London, is not surprised that rents in the capital are forecast to rise sharply. 

He points out that those investing in property for the rental market who would have originally been paying £7,500 in stamp duty on a property valued at £350,000, will now have to pay £18,000 . “a significant difference at over double the previous chargeâ€.

He continued: “This has been further compounded by the proposed reduction in tax relief that buy-to-let property owners can claim on their mortgage interest from their rental income, which will be phased in from 2017 and will be in full force by 2020.

“The natural result is that landlords will need to look for ways to recover these sums in the long term, particularly if they need mortgages to secure new properties.â€

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