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

Author

Listed:
  • Hang Lai
  • Stanimira Milcheva

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.

Suggested Citation

  • Hang Lai & Stanimira Milcheva, 2023. "To Rent or To Own? The Effect of Additional Transaction Tax on Buy-to-Let Housing Market," ERES eres2023_140, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_140
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    More about this item

    Keywords

    Build-to-Rent; Housing Policy; Rental Housing; Transaction tax;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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