Only 10% of all homes sold across Great Britain in H1 this year were purchased by landlords, revealed the latest Hamptons monthly lettings index.
This is the lowest share since the estate agent began these records in 2010, and considerably less than the 16% registered in 2015, before tax and regulatory changes were introduced.
The biggest decline in BTL property purchases was seen in London, where the share of homes bought by landlords has more than halved, from 17% in 2015 to an all-time low of 8% so far this year.
The North East is the only area that saw an increase in properties acquired by landlords since 2015, accounting for 25% of all landlord purchases — however, when compared to the number of purchases in 2023, the number has dropped by 1%.
Overall, Scotland has the lowest level of investor purchases — BTL investors bought just 5% of all homes sold in the area so far, down from 10% in 2015 and 6% in 2023.
According to Hamptons, the decline in BTL property sales is likely due to the high mortgage rats, combined with the political uncertainty pre-election and the threat of new rental regulations.
The lack of new investment comes despite yields rising to record highs across the country, going up to 7.3% — one percentage point higher than 2015, and up from 7% in 2023.
In cash terms, this means a typical investor would earn an extra £1,906 a year in rent on a £200,000 purchase than if they had bought in 2015 at a yield of 6.3%.
Despite the drop in new BTL investment, Hamptons’ research shows no sign of more landlords selling up their properties.
According to the estate agent, the share of homes sold by a landlord has been falling for the last three years — accounting for 13% of all sellers in the UK so far this year, down from 14% in 2023 and 16% in 2022.
Nevertheless, the firm claims that landlords are selling more properties than they’re buying, thus leading to a reduction in the number of homes available to rent.
If the current trends will continue in the second half of the year, the firm estimates that there will be 113,630 new BTL purchases in 2024 — 40% fewer than 2015 — and 146,060 BTL homes sold by private landlords.
In terms of rents, the average tenant paid £1,347 pcm to rent a new home in Great Britain last month, 5.8% or £74 pcm more than if they moved last year.
Aneisha Beveridge, head of research at Hamptons, said: “Rather than a mass landlord sell-off, the lack of homes available to rent has been caused by fewer investors entering the market.
“Tax and regulatory changes introduced since 2016 have been the main culprit, but these disincentives to invest have been compounded more recently by higher interest rates and political uncertainty around the threat of more rental reform.
“The lack of supply is one of the main factors underpinning strong rental growth and this is unlikely to reverse any time soon.
“The challenge for the new government, which is keen to boost homeownership, is to increase security and the quality of homes for tenants living in the rental sector without disincentivising or pushing out more landlords.
“While some of the homes that previously would have been bought by an investor have found their way into the hands of a first-time buyer, high mortgage rates and rising rents are likely to lock out many would-be homeowners over the next few years, keeping them in the rental sector for longer.”
