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Landlord sell-off slows outside Scotland

The share of homes sold by a landlord in Great Britain fell from 15.7% in 2022 to14.0% so far this year, Hamptons research shows.

This means investors are set to sell 139,820 buy-to-lets across Great Britain in 2023, 53,000 fewer than in 2022 and 62,000 less than in 2021 when landlord sales peaked

Scotland is the only region in Great Britain where the landlord sell-off has accelerated this year. Investors have made up a record 12% of all sellers in Scotland so far in 2023, up from 10% in 2022.

Aneisha Beveridge, head of research at Hamptons, said: “There’s a strong argument that landlords have been hit harder by higher rates than anyone else. However, despite these challenges, most landlords are sticking it out. Strong rental growth is softening the blow, but they’re also drawing on their equity and cash reserves to see them through. Portfolio investors – who tend to be more highly leveraged – are juggling their assets by selling one or two properties to reduce their mortgage debt on the rest of their portfolio, rather than selling up entirely.

“Most landlords cashing in are one of the 10%-20% of mortgaged investors who face making losses when remortgaging at higher rates. Typically, they bought low-yielding properties in the South of England relatively recently or they’ve been aggressively maximising their leverage and extracting equity to grow their portfolio.

“The real supply issue facing the private rented sector hasn’t just been caused by landlords selling up, but also because there’s been little appetite among investors to purchase new buy-to-lets over the last few years. This has reduced the number of homes available to rent which is fuelling rental growth. After adding wider inflationary pressures on top, we think rents will have risen by 25% by the end of 2026.”

Landlords have been selling more homes than they bought in every year since 2016, when a raft of tax and regulatory changes were introduced, including the elimination of mortgage tax relief, to be replaced by a 20% tax credit.