Landlords are selling more homes than they’re buying, according to Hamptons’ monthly letting index, although the sell-off is slowing down.
So far this year, landlords bought 11.2% of all homes sold across Great Britain but, apart from during the first nine months of 2020, this was the fewest number of homes bought by BTL investors in any year since at least 2010.
Hamptons reports that despite rising running costs and higher mortgage rates eroding profits, private landlords accounted for 14% of all sellers, down from 15.7% in 2022. By the end of this year, they are set to sell 139,820 buy-to-lets, 61,810 less than in 2021 when landlord sales peaked.
The North East, the highest-yielding region in the country, saw the pace of landlord sales slow the most; landlords accounted for 22% of all sellers in the region this year, down from a peak of 31% in 2022. However, given that 27% of homes in the North East were bought by a landlord, landlords are still buying more homes than they’re selling.
Scotland is the only region where the landlord sell-off has accelerated. Investors have made up a record 12% of all sellers in Scotland so far in 2023, up from 10% in 2022 – no doubt a result of more stringent legislation around rent rises and evictions.
Investors are increasingly selling lower-yielding homes and targeting higher-yielding options, says Hamptons.
The average gross yield achieved on a new purchase this year rose to 6.8%, while the average yield on sale was 5.5% across England and Wales. This yield gap equates to an extra £2,710 a year in rental income on a typical £200,000 buy-to-let.
Annual rental growth remained at 11.7% in October, led by double-digit hikes in London and Scotland. The average rent on a newly let property rose to £1,345pcm in October, up £141 on the same month last year.