Rising margins tempting landlords back to BTL, says leading agency

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Buy-to-let investors look set to outnumber first-time buyers next year as rising rents tempt more landlords to pick up deals.

Hamptons Monthly Lettings Index reports that 12.2% of homes were bought by investors in 2022, the highest share since 2016 and up from 11.7% last year.

But sales remain below their 15.5% peak in 2015, the year before the 3% stamp duty surcharge was introduced.                       

The number of landlords registering in Hamptons’ branches is up 9% on last year as they seek out homes which have been lingering on the market. In November, 37% of offers by landlords were on homes without any competing offers, up from 14% in January. 

A less competitive market means that last month, just 25% of investor purchases were agreed above the asking price, compared to 30% among first-time buyers.

League table

Landlords’ slow re-emergence has been underpinned by investment in towns and cities towards the top of the yield league table, according to Hamptons.

So far this year 56% of new investor purchases have been in places with average yields of 6% and above, up from 40% a decade ago. 

Hartlepool offered new investors the highest average gross yield (9.9%) in England and Wales for the second year running. Meanwhile, 85% of homes sold by investors were generating a yield of below 6%.

Aneisha Beveridge (pictured), head of research at Hamptons, says that while house price growth is slowing, rental growth continues to strengthen, offsetting some, but not all, of landlord’s increased costs. 

She adds: “It’s these rising costs which are likely to mean rental growth will remain high for the next few years. In Scotland, where landlords are capped in their ability to pass on higher costs to sitting tenants, rents on newly let properties will likely continue topping the growth charts. 

“When a tenant leaves and a home is re-advertised, the jump back up to market rate is much larger.”

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