Rising rents tempt landlords back to the market

Despite reports that landords are about to flee the market, research shows that the vast majority of existing buy to let investors are intent on staying put.

Latest insights from specialist lender Octane Capital show that confidence in the sector remains stable, despite impending tax changes and regulatory reform. Their findings are supported by Hamptons Research which shows that the proportion of home purchases being made by investors rose in 2022, the third year in a row.

High on the list of measures investors would like to see reversed are the changes to Capital Gains Tax allowances, the proposed ending of Section 21 evictions and the upcoming energy improvement requirements. Despite these headwinds, just 8% of investors intend to reduce the size of their portfolio in the coming year. Double that number expressed their intention to increase their holdings.

Hamptons Research say that rising rents are tempting investors, Enquiries per branch are up 9% since 2021, despite a fall in overall demand. While sale price growth is slowing, the rental market continues to strengthen with the average rent for newly let properties more than 10% higher than the previous year. Over 12% of home sales in 2022 were to new investors. This is the third consecutive year-on-year increase, though still below the levels before the stamp duty surcharge.

Hamptons point to a shift in investor preference away from lower earning properties to those with yields of 6% or more - typically in Northern England.