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The hike in stamp duty which came into effect at the start of the tax year in April is already having an effect on the type of properties in which buy-to-let landlords are investing. They are now looking to buy cheaper homes as a way of off-setting the three per cent increase in costs associated with the elevated stamp duty changes.

The average price they paid in April was £178,000 compared to £194,000 the previous month. The most significant change was in London, which commands the highest prices, with landlords spending an average of £365,000 in April compared to £436,000 in March, which is a reduction of 16.4 per cent. The average investor price is lowest in Scotland at £95,000 while the cheapest average investment in England was in the East Midlands at £116,000.

The Lettings Index produced by Countrywide also showed that the number of homes bought by landlords in April was half the number seen at the same time last year. There had been an increase at the start of 2016 as investors rushed to buy before the stamp duty increase came into effect.

Rental growth is also slow with average rents rising two per cent over the past year with a national average monthly rent at £932 for new lets. As expected, rents for new lets are highest in Central London with an average rent of £2,499 and are lowest in the North of England at £643.

Across the board, rents in April for renewed contracts were slightly lower at an average of £889 in the UK, with tenants paying the most in Central London at an average of £2,515 and the least in Scotland at £619.

Countrywide research director Johnny Morris said that the new stamp duty charge has not deterred landlords but has led to a change in habits. They are now buying cheaper properties which offer a higher yield with less stamp duty to pay.

The Bank of England says the changes to stamp duty, tax relief and new lending rules have not cooled the demand from buy-to-let investors. Although anticipating that there will be less activity in the second quarter of 2016, the Bank feels that the market will remain robust in the long term.

Other landlords have also decided to take their money abroad with a survey by showing that 23 per cent of UK landlords, who were asked, said they would consider buying abroad in a bid to secure a better return on investment.

France was the favourite location for 23 per cent of landlords with Spain coming in second at 18 per cent. However, they will need to take into account the different property taxes and capital gains taxes which apply in the various countries, in addition to the different rental rates and the tax they will have to pay.

However, the Netherlands offers the highest average yield at 6.57 per cent while France stands at 3.22 per cent, Spain is 4.96 per cent and the UK shows 4.28 per cent. Landlords can also demand higher rents for holiday lets than they can for long-term rentals although they will, of course, need to adjust this to allow for seasonality.