Buy to let property purchase data would suggest landlords are pulling out of the market.
In the first six months of this year, buy to let purchases were £12.1 billion, down a third by £5.2 billion compared to £17.3 billion in the same period of 2015.
The spend was the lowest since the first half of 2013, when investors purchased property worth £11.2 billion.
The peak was the first six months of 2016, when landlords spent £21.2 billion on new property in the lead up to the government imposing a 3% stamp duty surcharge on the market.
The figures from property consultancy Hamptons International also reveal 61% of landlords living in London preferred to buy investment homes outside the capital, more than double the 2015 figure of 25%.
While property purchases have dropped, buy to let rents have steadily increased.
The firm says the average UK rent is £980 a month, up 1.6% in the 12 months to September.
Aneisha Beveridge, Head of Research, Hamptons International, said:
“The total value of homes purchased by landlords has fallen by over £5 billion in just three years.
“This is due to landlords buying fewer buy-to-lets and investors spending less on the homes they do buy. With two out of five London based landlords looking outside the capital to buy their investments in search of higher yields and lower stamp duty bills, the average price of a home bought as a buy-to-let has fallen by 7% since 2016.
““Rental growth continues to gradually pick up. Rents rose in every region for the first time since January. London rents returned to growth for the first time in four months, fuelled by a pickup in Inner London.”
The average price of buy to let homes fell to £174,580 in the first half of 2018, 4% less than last year (£181,260) and 7% less than in 2016 (£188,220).
It appears that the government’s plans to cool the BTL market are working. Unclear if a drop of 7% is going to make these formally BTL properties affordable to first time buyers. Are the FTB filling the gap left by Landlords? or has this segment of the Property market also cooled? One thing I am sure of, this policy won’t built any more houses 🙂
Although, the UK stock market has had a recent boom (and bust), the like of which has not been seen since the rise of UK BTL investment. One may be forgiven for thinking that money that previously went into BTL investment has now gone into Stocks and Shares. I can’t imagine who would benefit from such a change in billions of pounds of investment. I am sure they could never influence government policies.
The peak of 21.2 billion in the first half of 2016 was not a true reflection on what landlords would have normally purchased if there was no impending tax due, some of these sales would have been made later in the year / 2017. The tax was introduced and Land lords have become pickier with what they buy…This slow down would influence property growth (result for the goverment(?))as there weren’t so many land lords competing with FTB”s. I’m only buying when I can now steal a property my decision is also influenced by the doom and gloom generated by the press on the outcome of brexit and it having a negative effect on house prices. I thing FTB”s are not buying because of this as well. I have also invested in the stock market but my returns after 10 months aren’t nowhere near where I would be if I had invested that money in property. I will be pulling my investment out of stocks and shares and continue to steal property when the opportunity arises. The government’s tax scheme has certainly worked but in turn they have driven rent prices up as land lords charge more to offset there increased tax bills. This in turn effects how a renting family can save for their first home. Was anything really achieved for the FTB? Of course not… but the government have done fine in tax revenue.