Residential rents across Britain increased by 1.6% year on year in the 12 months to Hamptons International report which also looked at what properties landlords are buying.
A breakdown of the figures shows that in London rents rose 0.1% year on year, the first annual rise in four months while Wales saw the strongest rental growth with average rents up 3.9% year on year, followed by the East up 2.8% and the Midlands up 2.4%.
The data also reveals that in the first half of 2018 landlords spent £12.1 billion purchasing rental properties, some £5.2 billion or 30% less than in the first half of 2015 when the total value of homes bought for buy to let reached £17.3 billion.
It means that the total value of homes purchased by landlords has reached the lowest level in five years since the £11.2 billion recorded in the first six months of 2013, having peaked in the first half of 2016 at £21.2 billion when second home owners rushed to beat the 3% stamp duty surcharge which was introduced in April 2016.
In London landlords spent £3.5 billion purchasing rental homes in the first six months of 2018, some 40% less than in the first half of 2015 and 22% less than the first half of 2017.
The reports suggests that the fall in the total value of landlord purchases has been caused by a decrease in the number of investors purchasing buy to let properties and landlords spending less on the properties they do buy as they increasingly head further North.
In the first half of 2018 landlords bought 64,260 homes in Britain, down 13% year on year and 31% less than in the first half of 2015. Landlords bought 12% of all homes sold in the first half of 2018, down from 17% in the first half of 2015.
In London, landlords bought 9,070 homes in the first half of 2018, some 36% less than in the first six months of 2015. The South East, Scotland and South West have seen the biggest falls in the number of homes bought by landlords, down 45%, 44% and 40% respectively since the first half of 2015.
The average price of a home bought by a landlord in the first half of 2018 fell to £174,580, some 4% less than last year when it was £181,260 and 7% less than in 2016 when it was £188,220. The report says that the fall has been fuelled by more landlords purchasing cheaper buy to let homes further North.
In the first nine months of 2018 some 61% of London based landlords purchased their buy to let properties outside of the capital, 10% more than last year and over double the proportion in 2012 when it was 25%. As a result, the average landlord based in London spends a quarter less on a buy to let property than they did in 2016.
‘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,’ said Aneisha Beveridge, head of research at Hamptons International.
‘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,’ she pointed out.
‘Rental growth in Britain continues to gradually pick up. Rents rose in every region across Britain 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,’ she added.
