Buy To Let is NOT dead - investors buy higher proportion of homes

Investment buyers will snap up a higher proportion of homes in 2022 than they did in 2021, the Hamptons agency forecasts.  

So far this year 12.2 per cent of homes were bought by investor, the highest level since 2016 and up marginally from the 11.7 per cent recorded during 2021. However, purchases remain below their 15.5 per cent peak in 2015, the year before the three per cent stamp duty surcharge was introduced.                       

Despite the proportion rising between 2021 and 2022 however, fewer sales overall mean the absolute number of investor purchases will be down by around 30,000 on last year.

Earlier in the year, many landlords struggled to make deals stack up while paying record prices and facing stiff competition from other buyers. Instead, they chose to sit back and wait.  

The proportion of investors paying over the asking price remained above 40 per cent throughout 2021, before peaking at 48 per cent in April 2022 - a trend mirrored in the wider market).

However, over the last few months some landlords have re-emerged, turning their attention to homes which have been lingering on the market.  

In November 37 per cent of offers by landlords were on homes without any competing offers, up from just 14 per cent in January. A less competitive market means that in November just 25 per cent of investor purchases were agreed above the asking price, compared to 30 per cent among first-time buyers.

Aneisha Beveridge, head of research at Hamptons, says: “Rising rents are tempting landlords to dip a toe back into the slowing sales market to try and pick up deals they couldn’t have got six months ago.  With sellers more open to negotiation and rents rising rapidly, returns for equity rich landlords have been rising.  

“While we’re unlikely to see landlords return to buying at pre-stamp duty surcharge numbers, it’s possible they may outnumber first-time buyers in some months next year, as was common before 2016.”

It's a similar story when it comes to time on the market, with the average investor purchasing a home which had been on the market for 54 days in November, up from just 33 days in November last year.  

By comparison, homes bought by first-time buyers last month had been marketed for an average of 40 days, while homes bought by movers (people selling their home to buy another) had been advertised for 50 days.