The Great British Landlord Exodus: A Look at the Buy-to-Let Market
It’s been quite the spectacle, folks! Landlords across Great Britain, especially in Scotland, are waving goodbye to their buy-to-let properties. It seems the once-booming market is now more of a bubble bath gone cold.
Rightmove Reports a Dip in Asking Prices
According to the property gurus at Rightmove, we’ve seen a cheeky drop in new seller asking prices. They’ve taken a 1.7% tumble, shedding an average of £6,088 to settle at £362,143. It’s like the market decided to go on a diet just before the holiday season!
Landlords Hitting the Brakes on Home Buying
Hamptons, the swanky estate agent, has been spilling the tea. They tell us that landlords are on track to snag the fewest homes since the good ol’ days of 2010. And that’s if we pretend the first Covid lockdown never happened (if only we could).
So far in 2023, the share of homes sold by landlords in Great Britain has slipped from 15.7% to a modest 14%. Investors have scooped up about 11.2% of all homes up for grabs this year. That’s a far cry from the 15.7% they bagged back in 2015.
Landlords Selling More Than They’re Buying
Hamptons has crunched the numbers and found that individual landlords have sold a whopping 294,300 more homes than they’ve bought since 2016. That’s enough to fill either Manchester or Cornwall with empty houses!
What’s Cooling Off the Buy-to-Let Market?
Let’s talk about the elephant in the room: taxes. The way buy-to-let incomes are taxed has changed, and not in a way that makes landlords do a happy dance. Then there’s the mortgage monster, which has grown massively after 14 consecutive interest rate hikes. And let’s not forget the new house emissions regulations that are making landlords sweat.
By 2028, landlord-owned properties need to be strutting around with an energy performance certificate (EPC) rating of C or better. This means many homes will need a makeover, and not the fun kind. It’s no wonder some landlords are choosing to cash out now.
Hamptons believes that 10%-20% of landlords who’ve had to remortgage are now seeing red in their ledgers. And for tenants, the pickings are slim. There are 43% fewer homes to rent compared to the same period in 2015.
Scotland Leads the Landlord Sell-Off
Scotland is leading the landlord exodus this year. Landlords account for a record 12% of all sellers, up from 10% last year. With rent caps and tighter rules, landlord purchases have hit a record low of 6%.
Rental Market Predictions
Aneisha Beveridge, the head honcho of research at Hamptons, predicts that the scarcity of rental properties could push rents up by 25% by the end of 2026. Landlords might be feeling the pinch, but strong rental growth is cushioning the blow.
Portfolio investors are playing a game of property Tetris, selling a few homes to lighten their mortgage debt. But the real issue isn’t just landlords selling up. It’s also the lack of new buy-to-let investments, which is stoking the fires of rental growth.
The End of the Property Price Boom?
Rightmove has noticed that the property price party is winding down. New seller asking prices have dipped by 1.7% as we approach Christmas. Sellers are getting real with their pricing to snag a buyer.
Prices are now lounging at 3% below their peak in May. Lloyds Bank has peered into its crystal ball and sees house prices continuing their slide this year and next. They don’t expect a recovery until 2025.
Savills, another estate agency heavyweight, predicts a 3% fall in average UK house prices in 2024, following a 4% drop this year.
What’s Next for the UK Housing Market?
Tom Bill, the head of UK residential research at Knight Frank, says we’re looking at a slowdown in transactions rather than a dramatic price plunge. The market’s been kept afloat by a lack of supply.
With higher rates, election buzz, overseas conflicts, and uncertainty over interest rates, the market’s mood is a bit gloomy. But fear not! Prices and sales volumes are expected to stabilize next year as the economic backdrop finds its footing.
So there you have it, folks! The great property sell-off is in full swing, with landlords heading for the hills and the market adjusting to a new normal. It’s a wild ride, but one thing’s for sure: the British property market is never dull!
