11:24 AM, 17th April 2023, About 11 months ago 39
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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