Buy to let investment bouncing back

The first quarter of 2022 was the most active for investor purchases since 2016, when the 3% stamp duty surcharge was introduced.

Research by Hamptons shows that the first three months of 2022 was the first time in six years that investors purchased more homes than they sold. Investors bought over 42,000 properties worth £8.5 billion in Q1 2022, representing 13.9% of all properties sold, up from 12% a year ago.

The equivalent figure in Q1 2016 was 15.9% as landlords rushed to buy before the new stamp duty rates were introduced. After the new rate took effect, the purchases of homes by investors fell back to 10% and has stayed at around that level ever since.

The proportion of homes sold by investors also fell, meaning a net gain of 13,000 homes in the private rental sector over the quarter.

The period also shows evidence of a rotation in the sector, with a higher proportion of sales in London and the South East, with an increase in purchases in higher yielding properties further north.

Over 40% of homes had previously been rented, up from 25% in 2016, meaning that landlords have been buying properties from other landlords. Hamptons expect this trend to continue into the future.

Criteria search platform Knowledge Bank have noted that interest from new landlords is also increasing. The term 'first time landlords' figured in the top five of searches by mortgage brokers in March.

With record increases in rental prices reported by both Zoopla and Rightmove, interest in the buy to let market from both newcomers and experienced landlords looks set to continue.