As the media continues to report on the ‘mass exodus’ of landlords, how many have actually left, and will they be back?
It seems we’re constantly hearing about the so-called ‘mass exodus’ of landlords from the buy to let sector. Media outlets are persistently reporting that droves of property investors are leaving the market in response to rate rises, taxation, and tougher legislation.
Whilst we acknowledge that the market has caused many to question whether property is still a worthwhile investment, it’s doubtful that such a substantial number of landlords have left the sector. Demand for rental properties remains high, with 15 households chasing every rental home and average rents for new lets across the UK at £1,226, according to Zoopla. As mortgage rates continue to soften, landlords can earn a great return on their investments.
What’s more likely is that landlords are becoming more economical about their investment properties, opting to prioritise higher-yielding buy to lets. Similarly, many landlords have simply reached retirement age, so it’s natural for them to be looking to sell their portfolios.
The number of landlords leaving the market
The think tank Resolution Foundation published a report back in April that shows we’ve seen as little as a 1% reduction in the number of landlords in the buy to let sector since mid-2019.
However, despite this positive report, other data paints a bleaker picture. Analysis from TwentyEA shows that in June this year, 18.4% of all properties listed for sale had been listed for rent within the three years prior.
This accounts for over 28,000 properties, a 100.6% increase year-on-year and a 27.4% monthly increase from May when Rishi Sunak called the election.
Whilst this report feels overwhelmingly negative, the sector is more nuanced than this data suggests. For one, there’s no way to track whether this shows landlords are leaving the sector altogether. Of course, it’s easier to suggest this is a result of ongoing market challenges causing a mass exodus, when in reality, it may just reflect landlords refocusing their investment strategies on more profitable properties. As with any investment asset, it makes sense to drop ones that aren’t performing to ensure you’re always getting maximum return on investment.
Furthermore, this data doesn’t account for the number of landlords simply biding their time for the general election outcome, a Base Rate reduction, and further drops in mortgage rate pricing. In fact, new reports suggest there are still many planning on sticking with buy to let.
Will landlords grow their portfolios once more?
New research from Paragon Bank reveals that 37% of portfolio landlords plan to purchase more properties this year. The report goes on to show that strong rental demand and a view to boost retirement income have driven these plans to expand property portfolios.
Moreover, the latest TMW BTL Barometer for Q2 2024 shows that 11% of landlords intend to purchase in the next 12 months, a figure that’s remained steady since Q1 this year. This month-on-month stability, compared to the TwentyEA analysis above, reflects how difficult it can be to quantify landlord activity.
With the percentage of landlords planning to invest and stay in the sector steadfast, while the number of properties previously let up for sale changes, it’s more plausible that landlords are simply reevaluating their property portfolios.
How can landlords navigate market uncertainty?
The best way for landlords to mitigate market challenges, particularly for those concerned about the future of buy to let, is to stay up to date on key legislation changes and industry news. It’s important to ensure you’re reading unbiased, informative updates that will help you stay on top of any changes.
It’s also worth discussing your current property finances with a broker, as you may find ways to save across your portfolio. With our complimentary portfolio review service, our brokers can advise you on your best next steps, no matter what your plans may be.
If you have any questions or concerns, please do not hesitate to contact our team of experts. With an unparalleled understanding of the current buy to let mortgage market, our brokers are best placed to help. Get in touch with our team here or call us on 0345 345 6788.
