Landlord sell-off slows down as rents continue rising

Landlords in Great Britain are holding on to their properties as rents soar to new heights, according to the latest Hamptons lettings index.

The index, which tracks the activity and trends of the private rented sector, shows that the share of homes sold by a landlord fell from 15.7% in 2022 to 14% so far this year.

This means investors are set to sell 139,820 buy to lets in 2023 – that is 53,000 fewer than in 2022 and 62,000 less than in 2021 when landlord sales peaked.

By the end of this year, private landlords will have sold 294,300 more homes than they’ve bought since 2016.

This is more than the total number of homes in Manchester (237k) and Cornwall (288k).

‘Landlords have been hit harder by higher rates’

The head of research at Hamptons, Aneisha Beveridge, said: “There’s a strong argument that landlords have been hit harder by higher rates than anyone else.

“However, despite these challenges, most landlords are sticking it out.

“Strong rental growth is softening the blow, but they’re also drawing on their equity and cash reserves to see them through.”

She added: “Portfolio investors – who tend to be more highly leveraged – are juggling their assets by selling one or two properties to reduce their mortgage debt on the rest of their portfolio, rather than selling up entirely.

“Most landlords cashing in are one of the 10%-20% of mortgaged investors who face making losses when remortgaging at higher rates.

“Typically, they bought low-yielding properties in the South of England relatively recently or they’ve been aggressively maximising their leverage and extracting equity to grow their portfolio.”

Only region where the landlord sell-off has accelerated

Scotland is the only region where the landlord sell-off has accelerated this year and where new purchases hit a record low.

Investors have made up a record 12% of all sellers in Scotland so far in 2023, up from 10% in 2022.

Landlords bought just 6% of all homes sold in Scotland so far this year, the lowest proportion in Great Britain – and it is where the gap between landlord sales and new purchases is widest.

However, landlords purchased 11.2% of all homes sold so far this year – that’s the lowest proportion since 2010 when Hamptons began keeping records.

There were 43% fewer homes available for tenants to rent in the first 10 months of this year compared to the same period in 2015.

The pace of landlord sales

In the North East, the highest-yielding region, the pace of landlord sales has slowed the most and accounted for 22% of all sellers, down from a peak of 31% in 2022 – but

– the North East and North West are the only regions where landlords are buying more homes than they are selling.

In London, the lowest-yielding region in the country and where mortgaged landlords are likely to be hardest hit by higher rates, new purchases have slipped.

Landlords bought 9% of homes sold in the capital this year down from a peak of 20% in 2015.

Consequently, the number of homes available to rent in the capital so far this year has halved relative to 2015 levels.

Rents rose 11.7% year-on-year

Rental growth shows little sign of slowing as rents rose 11.7% year-on-year in October, the same annual pace as in September.

The average rent on a newly let property rose to £1,345, up £141 compared to the same month last year.

This marked the third consecutive month of double-digit increases and the sixth double-digit hike recorded during the last 12 months.

Ms Beveridge said: “The real supply issue facing the private rented sector hasn’t just been caused by landlords selling up, but also because there’s been little appetite among investors to purchase new buy to lets over the last few years.

“This has reduced the number of homes available to rent which is fuelling rental growth.

“After adding wider inflationary pressures on top, we think rents will have risen by 25% by the end of 2026.”

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