Investors are seeing huge rental growth
The average landlord in England and Wales gained £94,800 more by selling their buy-to-let property, owned for an average of 11 years, research from residential estate agent Hamptons has shown.
The slowdown in house price growth, Hamptons said, has led to investors now making smaller gains when selling their buy-to-let – this gain now down 10.1% from a record £105,300 last year and almost identical to what landlords achieved, selling in 2016
Average gains on the sale of a property by a landlord fell year-on-year in every region for the first time since 2020, with just three regions – London, South East, and East – still having the average investor profit at six figures.
The latest Hamptons Monthly Lettings Index also found few signs that the pace of rental growth is slackening, with the cost of a new tenancy up 9.9% year-on-year across Great Britain to an average of £1,282 per month.
On an annual basis, rents have risen by more than 5% for 27 consecutive months, and above 7% for the last 10 months. This prolonged period of growth leaves the average rent 28% higher than in February 2020, on the eve of the COVID-19 pandemic.
Over the last year, rents in London have continued to rise faster than anywhere else in the country, with the average price of a new let up 13.9%. Annually, rents here have been growing at a double-digit pace for 15 of the last 17 months.
“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,” commented Aneisha Beveridge (pictured), head of research at Hamptons. “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. 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.
Beveridge added that new homes coming onto the market continued to achieve record rents, and that in the short term, it was 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,” she said. “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.”
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