Landlords selling up see capital gains fall

Landlords who have sold up this year have seen their capital gains take a hit – they are making £10,000 less than they did last year, research reveals.

According to real estate firm Hamptons, the average BTL landlord who sold a property this year made £95,000.

The firm says that of the buy to lets sold in 2023 so far, the average gain is 10.1% lower than those sold last year.

The data also shows that landlords in every region recorded smaller gains than in 2022, with the North of England recording the largest drop in their gross return on the sale.

‘Signs that the landlords looking to sell’

Hamptons’ head of research, Aneisha Beveridge, said: “As house prices start to slip back, there are signs that the landlords looking to sell today may have missed the top of the market.

“Rather, some investors are consoling themselves with record-breaking rental growth which is slowly ironing out the arithmetic for landlords.

“Lower house prices and higher rents will combine to shore up the rental market as more landlords hold off on the decision to sell.”

‘Landlords selling up’

She adds: “On the flip side, this will also weigh down on the government’s capital gains receipts handed over by landlords selling up over the next few years.

“New homes coming onto the market continue to achieve record rents and in the short term it’s hard to see what would put concerted downward pressure on the pace of growth.

“With around 35,000 landlords coming off fixed rate mortgages each month, the upward pressure on landlords’ costs marches on.

“In the run up to remortgaging, landlords are fighting to balance the books by paying down debt and hiking rents that have dropped below market rate.”

6% of landlords who sold made a loss

Hamptons says that overall, 6% of landlords in England and Wales who sold their BTL property made a loss – that’s up slightly from 5% last year.

And 19% of investors who sold a flat, and 22% of investors in the North East sold for less than they had paid.

However, as house price growth begins to slow down, investors are now making smaller gains when selling, compared to those who sold last year.

So far this year, the average landlord in England and Wales sold their buy to let for £94,800 more than they initially paid for the property. The average length of ownership is 11 years.

Hamptons also says that the gain is almost identical to what landlords selling in 2016 achieved.

Rents across Great Britain rose by 9.9%

In some good news, the firm says that rents across Great Britain rose by 9.9% on last year, the 27th consecutive month where rental growth has been running above 5%.

That means rents are 28% higher than they were before the pandemic, and a new tenancy is up 9.9% year-on-year to reach an average of £1,282.

As usual, rents in London have continued to rise faster than elsewhere with the average price of a new let up 13.9% but rent rises in central London are now slowing down.

Hamptons also highlight that since the pandemic, rent rises in the North have been faster than for tenants in the South.

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