Analysis by estate agent Hamptons found that so far this year private landlords account for 14 per cent of sellers, down from 15.7 per cent last year. This translates into 103,130 homes sold between January and September, some 39,270 or 28 per cent fewer than the same period in 2022.
If the current pace of property sales continues and a total of 1 million sales take place across Britain this year, private investors will be on course to sell 139,820 buy-to-let homes in 2023. This is 53,240 fewer than in 2022 and 61,810 less than in 2021 when landlord sales peaked.
Scotland bucks slowing trend
The slow down in sell-offs can be seen everywhere except for Scotland where landlord sales have accelerated.
Investors have made up a record 12 per cent of all sellers in Scotland so far in 2023, up from 10 per cent in 2022.
Tighter rules and regulations, predominantly in the form of rent caps, have driven landlord purchases to a record low too.
Landlords bought just six per cent of all homes sold in Scotland so far this year, the lowest proportion in Great Britain. It’s also where the gap between landlord sales and new purchases is widest.
Purchase rates remain low across Great Britain. In the year to date, landlords bought 11.2 per cent of all homes sold. Apart from during the first nine months of 2020, landlords will have bought the fewest number of homes in any year since at least 2010 when Hamptons’ records began.
Landlords have been selling more homes than they bought in every year since 2016 when a raft of tax and regulatory changes were introduced.
By the end of 2023, Hamptons estimates that individual landlords will have sold 294,300 more homes than they’ve bought since 2016, more than the total number of homes in Manchester or Cornwall.
Overall, there were 43 per cent fewer homes available for tenants to rent in the first 10 months of this year compared to the same period in 2015.
Regional differences
The North East is the highest-yielding region in the country and saw the pace of landlord sales slow the most this year.
Higher average returns offer landlords more scope to cover their rising costs. Landlords accounted for 22 per cent of all sellers in the region this year, down from a peak of 31 per cent in 2022. Some 27 per cent of homes in the North East were purchased by a landlord this year which means landlords are still buying more homes than they’re selling.
The North West is the only other region where this is taking place.
In London, the lowest-yielding region in the country, new purchases have slipped.
Landlords bought 9 per cent of homes sold in the capital this year down from a peak of 20 per cent in 2015. The share of homes sold by London investors has also declined from 19 per cent in 2022 to 15 per cent so far this year.
Consequently, the number of homes available to rent in the capital so far this year has halved relative to 2015 levels.
Landlords ditch five per cent yields
Hamptons analysis highlights that landlords are increasingly selling lower-yielding homes, while those purchasing a new investment are targeting higher-yielding options.
The average gross yield achieved on a new purchase this year rose to 6.8 per cent, whereas the average yield on sale was 5.5 per cent across England & Wales. This yield gap equates to an extra £2,710 a year in rental income on a typical £200k buy-to-let.
Just over half of all homes sold by a landlord in England and Wales this year were achieving a sub-5 per cent gross yield, up from 46 per cent in 2022.
Meanwhile 78 per cent of new buy-to-lets achieved a +5 per cent gross yield so far this year, up from 65 per cent in 2019.
Strong rental growth has meant that a record 12 per cent of new buy-to-let purchases this year achieved a gross yield of 10 per cent or above, double the share in 2021. These returns are pre-costs and taxes which will eat into profit.
