Buy To Let investors plummet while the rest focus on high yield areas

New figures from lettings agency Hamptons suggest that investors purchasing buy to let properties are increasingly looking to the north of England where yields are highest.

Hamptons data suggests that six of the 10 local authorities with the highest share of buy to let purchases are in the north.

Sunderland tops the list, where 45% of homes were bought by an investor during the first half of the year.  Other favoured northern locations are Middlesbrough, Derby, Darlington, Liverpool, Blackpool and Preston.

Swindon, Enfield and Torbay are the only Southern local authorities to make the top 10 list.

Overall Hamptons data shows that landlords purchased one in 10 homes sold across Britain during the first half of this year. This is the lowest share since the agency’s records began in 2010 and is considerably less than the 16% recorded in 2015 - before tax and regulatory changes were introduced, which reduced the appeal of investment in buy to let.

More recently, high mortgage rates combined with political uncertainty and the threat of new rental regulations have weighed on the appetite for new investors to enter the market.  The share of investor purchases has been gradually falling over the course of the year, reaching a low of 9.7% in June.

Assuming current trends continue into the second half of the year, in number terms, Hamptons warns that there are likely to be 113,630 new buy to let purchases across Great Britain in 2024 - that’s 75,900 or 40% fewer than in 2015. 

Aneisha Beveridge, Head of Research at Hamptons, says: “Rather than a mass landlord sell-off, the lack of homes available to rent has been caused by fewer investors entering the market.  

“Tax and regulatory changes introduced since 2016 have been the main culprit, but these disincentives to invest have been compounded more recently by higher interest rates and political uncertainty around the threat of more rental reform.

“If investor purchases and sales continued at 2015 levels, there would likely be 450,000 more private rental homes in Great Britain by the end of this year. This is roughly equivalent to the total number of homes in Birmingham.  

“Most investor purchases this year have been driven by cash-rich, larger portfolio landlords who continue to expand their portfolios.        

“The lack of supply is one of the main factors underpinning strong rental growth and this is unlikely to reverse any time soon.”