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Extended Stamp Duty Holiday Suggests Many Tenants Will Rent for Longer

Rent Guarantor Apr 01, 2021

While the extension of the stamp duty holiday announced in the budget earlier in March was welcomed by many home buyers and sellers, many renters in the process of saving their deposit to buy were likely less thrilled.

That's because a longer period of a stamp duty holiday has helped push the price of properties higher across the UK, meaning those living in letting accommodation while also saving to buy their own property will have to save a larger deposit.

In addition, separate research shows that over one quarter of private renters are worried they could become homeless due to the effects of the pandemic and the costs of renting. Depression and anxiety over their ability to afford the monthly rent has risen, while tenants also report having missed meals and reducing the amount they're heating their home to save money. Together, this shows that the broader effects of the pandemic continue to prove difficult for many tenants across the UK.

Rising House Prices Mean Bigger Deposit

With the UK’s Chancellor working to encourage more economic activity through schemes such as the stamp duty holiday, it can be easy to forget that much of the population won’t benefit from them. However, with stamp duty tax no longer required on properties sold for up to £50,000, many sellers are increasing the price of the home they’re selling - pushing house prices up in the process. 

And, with higher house prices comes the requirement for a higher deposit and this is where things become difficult for those living in rental accommodation who are saving to buy a home. Along with worries related to other effects of the pandemic, many tenants will now need to save more money to buy the home they want. In some cases, the required deposit could be thousands more than a few months ago.

According to research from Hamptons International, some tenants in the UK have been hit with a double-whammy – higher rents due to scarcity of supply and the need to save a higher deposit to buy a home due to rising house prices.

“This year we’ve seen a sharp decline in the number of rental homes coming onto the market. Would-be tenants are now faced with significantly less choice, which in turn is pushing up rents,” said Aneisha Beveridge, Head of Research at Hamptons. “At the same time, many renters who were looking to buy had to put their plans on ice and continue renting, as banks sought larger deposits for house purchases.”

Affordability Worries

But that’s not the only problem for many tenants living in the letting sector across England. Research from homeless charity Shelter shows that six million, or some 14% of adults,  are more worried about becoming homeless during the pandemic.

This feeling comes as increasing proportions of the population are skipping meals and reducing how long they heat their homes for to save money and pay rent. Specifically, Shelter data shows:

  • 27% of private renters are worried they will become homeless
  • 24% of private renters have had to borrow money to pay their rent  
  • 18% have cut back on food or skipped meals to pay their rent 
  • 12% have cut back on heating their home to pay their rent 

Anxiety and depression have also risen among those living in the private renting sector as uncertainty and worries about jobs and earnings surge.

With concerns like this rising among the UK’s tenants, its easy to see why bodies like the National Residential Landlords Association are calling for more government support for the lettings sectors. However, whether or not any further support will be forthcoming – for tenants or landlords -  remains to be seen.

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