11:24 AM, 17th April 2023, About 2 years ago 39
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Most BTL investor sales are from those landlords who were among the first to invest after buy to let mortgages were launched in 1996, research reveals.
The findings from Hamptons show that landlords are now retiring and selling up in increasing numbers – and the number will rise over the coming years.
The estate and letting agents say that with the average landlord turning 60, it is now these older investors who are leaving the market.
The agency estimates that 140,000 landlords retired last year, and they accounted for nearly three-quarters (73%) of all landlord sales.
Aneisha Beveridge, the head of research at Hamptons, said: “Two decades on from the birth of buy-to-let mortgages in the late 1990s, early investors are starting to sell up.
“This means that demographics alone will push up the number of landlord sales over the next five years to reach a new peak.
“This was likely to happen irrespective of the tax or regulatory changes introduced since 2016 and the more recent higher interest rate environment.”
Hamptons says that with around 96,000 landlords turning 65 each coming year across Great Britain, the number of landlords who are retiring will continue rising and will hit a new peak in five years.
And this is on top of nearly 924,000 landlords who are already over the age of 65.
The research shows that between 2010 and 2022, the number of landlords who retired every year has doubled – and this will rise as the population grows older.
Hamptons says that properties that were bought by landlords 15-25 years ago still make up the majority of privately rented homes in Great Britain.
Just over half (51%) of today’s total number of outstanding buy-to-let mortgages were taken out between 1996 and 2007.
And it is this cohort of ageing investors who bought when the sector was growing rapidly that are now increasingly likely to sell up and cash out.
But they leave behind a gap which is not being filled by new landlords entering the sector.
Ms Beveridge said: “While the tax and regulatory changes haven’t driven a buy-to-let sell off, they have stemmed the next generation of landlords.
“The number of new purchases by landlords has remained relatively muted.
“Millennials, who have struggled to get onto the housing ladder, have not been in a position to afford or consider purchasing a buy-to-let too.”
Hamptons says that the ageing landlord profile has played out in recent investor sales with 45% of homes sold by landlords so far this year being bought at least 15 years ago.
That’s up from 2018’s figure of 33%.
The firm says that many of the first buy-to-let mortgages were used to purchase new low-rise city centre flats and it’s these flats which form the largest proportion of sales by today’s long-term landlords.
Suburban London tops the list with 60% of landlord sales in Redbridge having been owned for 15+ years, followed by 59% in Ealing, 58% in Harrow, 55% in Barnet and 53% in Enfield.
Meanwhile, Hamptons says that rent growth in March reached its third ever double-digit increase since its Lettings Index began in February 2014.
In March, the average rent for a newly let home reached £1,236 per month – that is 10.8% or £121pcm higher than the same month last year.
March also saw the second fastest increase posted in any month after the 11.5% increase in May 2022.
Ms Beveridge said: “While house price growth continues to slow, rents keep moving in the opposite direction.
“Tenants find themselves with a little more choice than they did last year, which has been reflected in a 10% increase in the number of tenants moving home.
“However, the number of rental homes on the market seems to have found a new normal at nearly two-thirds below pre-pandemic levels.”
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Reluctant Landlord
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Sign Up11:31 AM, 19th April 2023, About 2 years ago
if you want possession to sell - do a deal with your tenant to move out?
Are they actually paying the rent in full and on time? Why was the original S21 issued?
Annabel Blake
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Sign Up11:39 AM, 19th April 2023, About 2 years ago
Reply to the comment left by Rod at 19/04/2023 - 10:48
We issued S21 notices to two of our long-standing tenants ealier this year (one of them is a second-generation tenant, having taken over the tenancy from her mother). In recognition of the fact that they will inevitably need to pay more rent than they have been paying us - our rents are always below market rent - and the fact that they may have to pay deposits up-front and removal expenses, we have offered both of them 'goodwill' payments to help them make the transition to new houses. We have said we will make the payments the day they move out, but also offered them an advance if they are struggling to find the deposit for a new place. Although the amount we have offered is more than the equivalent of two months' rent, I can see that something along these lines might be equitable. I am finding it really hard to tell our good tenants that we need our houses back, but after 25 years as landlords we need the equity from the properties to prop up our retirement, as that was always our plan.
RODNEY CRABB
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Sign Up8:39 AM, 22nd April 2023, About 2 years ago
Reply to the comment left by TJP at 17/04/2023 - 18:35
Hi TJP
How can they defer for so long
Which area of the country if you don't mind giving the info
TJP
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Sign Up17:53 PM, 22nd April 2023, About 2 years ago
Reply to the comment left by RODNEY CRABB at 22/04/2023 - 08:39
Willesden County Court, London
T G
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Sign Up4:41 AM, 6th May 2023, About 2 years ago
It is not uncommon for early buy-to-let (BTL) investors to retire and sell their properties. There are several reasons why this might happen:
1 - Changes in the market: The BTL market has changed significantly over the years, with regulatory changes, tax changes, and changes in property values all impacting the profitability of BTL investments. Some early investors may have found that their properties are no longer generating the returns they once were, making it less attractive to continue to hold onto them.
2 - Retirement planning: Many early BTL investors purchased properties as part of their retirement planning strategy. Now that they have reached retirement age, they may be looking to sell their properties to fund their retirement or to free up their time to pursue other interests.
3 - Estate planning: Selling properties can be a way for early investors to pass on wealth to their heirs or to simplify their estate planning.
4 - Health and mobility issues: Some early investors may find that maintaining their properties has become more difficult due to health or mobility issues. Selling their properties can be a way to reduce their responsibilities and ensure that their investments are managed effectively.
Overall, the decision to sell BTL properties will depend on a range of factors, including market conditions, personal circumstances, and investment goals. It is important for investors to carefully consider their options and seek professional advice before making any decisions.
GlanACC
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Sign Up10:20 AM, 7th May 2023, About 2 years ago
I am of retirement age, sold 12 properties already and will sell the remaining 6 when tenants leave. Sold the 12 to pay off the mortgages on the remaining 6. Not really bothered what rent I charge as I never made much out of the rents, it was all spent on maintenance and tax ! (as long as rent covers my costs and tax I am happy with that - will make my profit with capital appreciation) However, if I were just starting again I wouldn't have chosen BTL to inverst in. Sell today, don't delay.
Karen
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Sign Up12:42 PM, 11th May 2023, About 2 years ago
Maybe another reason older landlords are getting out is because it makes no sense for them to go through the incorporation of their portfolio and they also do not want to take out 5 year fixes etc.
Karen
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Sign Up12:46 PM, 11th May 2023, About 2 years ago
Reply to the comment left by Whiteskifreak Surrey at 19/04/2023 - 09:40
Most MPs have no understanding of the private sector (or bother to look into anything in great depth). They just seem to go along with whatever the party line is.
Cromerty
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Sign Up7:45 AM, 17th May 2023, About 2 years ago
Reply to the comment left by northern landlord at 17/04/2023 - 18:09Agree with Northern landlord. Putting an agent between yourself and the tenant ensures distance, a sense of professional good practice, and in my experience, fewer issues with poor rent payments, late night emails, and antisocial behaviour. Possibly this is because good tenants will only ever use agents as they feel a degree of protection and professionalism themselves. No costlier in the long run if you are avoiding court charges, deep cleaning, or unreasonable damage.