To Rent or To Own? The Effect of Additional Transaction Tax on Buy-to-Let Housing Market

Hang Lai and Stanimira Milcheva

ERES from European Real Estate Society (ERES)

Abstract: UK housing policy has focused on restricting investment behaviour and boosting the homeownership rate in recent years. This article estimates the effect of a 3% additional transaction tax (stamp duty land tax) on the Buy-to-Rent, known as Buy-to-Let (BTL) market in the UK. We find evidence of average price decreases but with the trend of immediate increase after policy announcement and decrease rapidly after the implementation date. The additional stamp duty land tax (SDLT) not only affects the transaction price but also leads to a significant drop in BTL transaction volume and an increase in the rental price, showing that landlords compensate their loss in investment by increasing the burden of tenant and indirectly affecting the ability of tenants for owning a home.

Keywords: Build-to-Rent; Housing Policy; Rental Housing; Transaction tax (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-pbe and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2023_140

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