Landlords purchases fall by £5.2 billion in 3 years
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Landlord purchases fall by £5.2 billion in 3 years

 

In H1 2018 landlords spent £12.1 billion on new buy-to-let purchases, £5.2 billion or 30% less than in H1 2015 (£17.3 billion)

• Landlords bought 64,260 homes in H1 2018, 31% less than in H1 2015. The South East has seen the biggest fall with 45% fewer landlord purchases

• The average price of a home bought by a landlord in H1 2018 was £174,580, 4% less than last year and 7% less than in 2016

• 61% of London based landlords purchased their buy-to-let properties outside the capital – over double the proportion in 2012 (25%)

• Rental growth across Great Britain accelerates as the average rent on a new let rose to £980 pcm in September, up 1.6% year-on-year

In H1 2018 landlords spent £12.1 billion purchasing rental properties, £5.2 billion or 30% less than in H1 2015 when the total value of homes bought for buy-to-let reached £17.3 billion in Great Britain. The total value of homes purchased by landlords has reached the lowest level in five years (since H1 2013 - £11.2 billion), having peaked in H1 2016 at £21.2 billion when second homeowners rushed to beat the 3% stamp duty surcharge which was introduced in April 2016 (chart 1).

In London landlords spent £3.5 billion purchasing rental homes in H1 2018, 40% less than in H1 2015 and 22% less than H1 2017 (chart 1).

The fall in the total value of landlord purchases has been caused by a decrease in the number of investors purchasing buy-to-let properties and landlords spending less on the properties they do buy as they increasingly head further North. In H1 2018 landlords purchased 64,260 homes in Great Britain, down 13% year-on-year and 31% less than in H1 2015 (table 1). Landlords bought 12% of all homes sold in H1 2018, down from 17% in H1 2015.

In London, landlords bought 9,070 homes in H1 2018, over a third less (-36%) than in H1 2015. The South East, Scotland and South West have seen the biggest falls in the number of homes bought by landlords, down -45%, -44% and -40% respectively since H1 2015 (table 1).

The average price of a home bought by a landlord in H1 2018 fell to £174,580, 4% less than last year (£181,260) and 7% less than in 2016 (£188,220) (table 2). The fall has been fuelled by more landlords purchasing cheaper buy-to-let homes further North.

In the first nine months of 2018, 61% of London based landlords purchased their buy-to-let properties outside of the capital (chart 2). This is 10% more than last year and over double the proportion in 2012 (25%). As a result, the average landlord based in London spends a quarter less on a buy-to-let property than they did in 2016.

Rental growth across Great Britain accelerated as the average rent on a new let property rose to £980 pcm in September, up 1.6% year-on-year (table 3). Rents grew in every region across Great Britain for the first time since January 2018. In London rents rose 0.1% year-on-year, the first annual rise in four months. Wales saw the strongest rental growth with average rents up 3.9% year-on-year, followed by the East (2.8%) and the Midlands (2.4%) 

Commenting Aneisha Beveridge, Head of Research, Hamptons International, said:

“The total value of homes purchased by landlords has fallen by over £5 billion in just three years. This is due to landlords buying fewer buy-to-lets and investors spending less on the homes they do buy. With three in five London based landlords looking outside the capital to buy their investments in search of higher yields and lower stamp duty bills, the average price of a home bought as a buy-to-let has fallen by 7% since 2016.

“Rental growth in Great Britain continues to gradually pick up. Rents rose in every region across Great Britain for the first time since January. London rents returned to growth for the first time in four months, fuelled by a pickup in Inner London.”

 

 

 

 

Chart 1 - Total value of homes purchased by landlords in Great Britain & London

 

Source: Hamptons International & HMRC

 

Chart 2 – Proportion of London based landlords purchasing rental properties outside the capital

Source: Hamptons International

 

Table 1 – Number of homes purchased by landlords

Source: Hamptons International & HMRC

 

Table 2 – Average price of a home bought by a landlord in Great Britain

Source: Hamptons International

 

New let rents (September 2018)

Source: Hamptons International

 

For further information please contact:

Alison Blease

Head of Research PR, Hamptons International

Tel: +44 (0) 776 96 77 825

Email: bleasea@hamptons-int.com

 

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