Rising rents mean a greater share of private investors are buying residential property, according to a leading estate agent.
A hefty 12.2% of all homes have been bought by an investor in the year to date, research from Hamptons International showed. This is up from 11.7% in 2021, it said, and represents the highest share since 2016.
But despite this rising proportion, fewer sales across the market mean the actual number of buy-to-let purchases is down by around 30,000 year on year.
The share of private investor purchases is also down from the peak of 15.5% recorded in 2015. This was the year before a 3% additional stamp duty charge was slapped on individuals buying a second home.
The return of landlords who “had previously been priced out of a heated market” means that — despite a fall in overall homes demand — the number of people registering in a branch has risen 9% so far in 2022, Hamptons said.
It noted that “many landlords struggled to make deals stack up while paying record prices and facing stiff competition from other buyers.” The estate agent said that the proportion of investors paying over the asking price peaked at 48% in April.
However, it said that some private investors have re-emerged to snap up properties that have remained unsold.
In November, the average buy-to-let investor bought a home that had been on the market for 54 days. This was up significantly from 33 days in the same month in 2021.
In addition, 37% of offers from landlords last month were made on properties without any competing offers. This was up substantially from 14% in January.
Bargain Hunters Emerging
Commenting on the data, Aneisha Beveridge, head of research at Hamptons, said that “rising rents are tempting landlords to dip a toe back into the slowing sales market to try and pick up deals they couldn’t have got six months ago.”
She noted, too, that sellers have been more open to negotiation more recently, adding that “while we’re unlikely to see landlords return to buying at pre-stamp duty surcharge numbers, it’s possible they may outnumber first-time buyers in some months next year.”
Rents Rise Again In November
Hamptons said that average rents rose 7.9% in November. This was the third straight month of annual increases and was led by gains in Scotland.
Rents on freshly-let properties north of the border “are exempt from the price freeze introduced in September,” the estate agent noted.
Hamptons predicted that rents in the UK will keep growing over the medium term, too. It said that “while house price growth is slowing, rental growth continues to strengthen, offsetting some, but not all, of landlord’s increased costs. It’s these rising costs which are likely to mean rental growth will remain high for the next few years.”