An analysis from My Auction found that landlords were willing to sell properties for up to 25 to 30 per cent less than the investment might have sold for before just to get out of the market.
The company said landlords with cash were benefitting the most because they do not rely on mortgage rate increases and are therefore able to make lower offers on these properties.
My Auction said for landlords looking to buy properties at auction, the rise in returns meant an eight per cent yield could equate to a 25 per cent reduction of the property’s value compared to this time last year.
Sought after properties
The company found that in the last few months, the most common type of property in demand was two-bedroom flats, generating interest from 40 per cent of buyers. This was followed by two or three-bed houses taking a 30 per cent share of bidder interest, and one-bedroom flats at 15 per cent.
Some 15 per cent of investment purchases have been houses of multiple occupation (HMO). My Auction said despite being harder to manage, HMOs were in demand due to the properties generating average returns of eight per cent.
Stuart Collar-Brown, co-founder and director of My Auction, said: “The interest rate rises have solidified and sped up the mass exodus of buy-to-let investors from the market. However, other contributing factors, such as the consistent changes in legislation and taxation surrounding landlords in this section of the market, have made it almost unviable for some landlords to retain their investment properties.
“Landlords who are cash rich have the added benefit of not being reliant on mortgage rate increases, so we are seeing many making lower offers due to their ability to transact very quickly in a falling market.
He added: “Investors in London are looking for rental yields around seven to eight per cent now, compared to five to six per cent pre-pandemic, so those looking to exit the market are having to be far more realistic with their expectations compared with the peak of the market in August/September 2022.”
