Property has taken a battering since the Brexit vote with billions of pounds moving out of the market since June.
Although the number of homes for rent rose in September, commercial property funds have seen £3 billion leave the sector and the number of sales recorded by HM Revenue and Customs (HMRC) has dropped significantly.
So, what is the lie of the land for property investors?
Letting agents say they have an average 193 buy to let homes to manage for each branch, with 40 home seekers looking to rent, according to a survey for September by the Association of Residential Letting Agents (ARLA).
ARLA managing director David Cox said: “The supply of rental stock has risen astronomically, which suggest it’s not quite right that landlords are pulling out of the market because of Brexit.
Tax changes and Brexit impact
“This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch. ”
However, some of the property feeding through to the rental market was probably bought in March before a 3% stamp duty surcharge came into force for landlords, says HM Revenue and Customs (HMRC).
HMRC confirmed home sales fell by 11.3% to 93,130 in September, compared with 12 months earlier. Other transactions, including commercial property saw 9,670 transactions.
The tax authority considers Brexit and changes in tax and mortgage availability for landlords have all hit the market.
“The large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties in April 2016,” said the HMRC report.
Commercial funds take hit
“However, whilst April and May 2016 are lower than the corresponding months in 2015, it should be noted that the total for Quarter 1 to Quarter 2 of 2016 is still substantially higher than the corresponding period last year.”
Commercial property is going through a less favourable patch, says the Investment Association.
Investment swelled from £13 billion to £28 billion in the past decade, but has slumped by £3 billion as investors rushed to cash in their stakes since the Brexit referendum.
Experts say the trend is for investors to desert funds in favour of small businesses, such as convenience stores, newsagents and self-storage facilities.
“Investors are buying single properties with a single tenant and because they are not as secure as the businesses bought by commercial property funds and they have more return, between 7.5% and 10%,” said Martin Tilley of property consultants Dentons.
