Research uncovers BTL hotspots for a second home investment
Research by London rental platform Rentd has found that the buy-to-let sector is showing signs of potential growth with the level of investment into additional dwellings and the value of these purchases climbing year on year.
Around 10% of the population are thought to own an additional property, with the vast majority investing in a buy-to-let rental property.
Analysing data on additional property purchases made in the financial year 2020–21, Rentd found there was a 3.2% increase in transaction volume, with these purchases carrying a market value of £70.9 billion, a 13% increase on the previous year.
“Changes to stamp duty tax thresholds on second homes and buy-to-let properties have been just one government initiative designed to deter additional bricks and mortar investment,” Ahmed Gamal, founder and chief executive of Rentd, commented.
“But despite their endeavours to dampen appetites, additional property purchase still accounted for around one in five of all residential transactions in the last year alone. Not only is the level of this investment increasing, but the value of these portfolios has also climbed considerably and it’s fair to say that the buy-to-let sector, in particular, is far from on its knees.”
Read more: Viability of buy-to-let called into question.
According to the research, the South West has seen the largest increase in market activity for additional property investment, with an 8.1% annual increase in transactions, while the value of these purchases has climbed by a huge 22.4%.
At 6.6%, the South East has seen the second largest increase in market activity concerning additional property investment, with the value of the market also up 17.6%.
The North East ranks third, where there have been 5.5% more additional properties purchased in the last year, although the East of England has seen the third largest uplift in the value of these transactions at 16.1%.
The East Midlands (-2%) and West Midlands (-2.2%) are the only two regions to see a decline in transaction volume where additional property purchases are concerned, although both have seen the market value of these transactions increase at 8.2% and 7.1% respectively.
While London sits mid-table where the annual change in market activity is concerned, the capital is the most valuable market for additional property investment by some margin, with £23.2 billion invested in the last year.
At Borough level, Sutton has seen the biggest uplift in activity, with additional property investment increasing by a huge 33.3% year on year, while Merton (28.6%) and Hounslow (22.2%%) also saw some of the largest annual increases in investment.
However, it’s Hillingdon that has seen the biggest boost where market values are concerned, with the total value of additional property purchases made over the last year coming in 59.3% higher than the previous year.
