Landlords swoop on housing downturn to snap up bargain properties

In another article in the Telegraph, Melissa Lawford is reporting that Buy-to-let investors are swooping to snap up property bargains as buyer demand disappears amid the housing market downturn.

It can be seen here (subscription may be required) and says:

Between January and November, the share of offers made by buy-to-let investors on properties that had no other bids more than doubled from 14pc to 37pc, analysis by Hamptons estate agents found.

This was the highest proportion on record in at least four years and was far above the 20pc pre-pandemic benchmark in November 2019.

The landlord buyer share has now hit its highest level since the Government introduced a three percentage point stamp duty surcharge in 2016.

In the year to date, buy-to-let investors made up 12.2pc of sales, up from a low of 10.6pc in 2020.

So far, this share has grown because landlords are filling a void as high mortgage rates have locked first-time buyers and homemovers out of the market – rather than because more investors are buying. Fewer sales overall mean the absolute number of investor purchases in 2022 will be down by around 30,000 compared to last year.

Landlords are filling the void as demand slumps

But house price falls and rising rents are starting to tempt more investors back. The number of buy-to-let investors registering with agents was up by 9pc year-on-year despite an overall fall in buyer demand.

Aneisha Beveridge, of Hamptons, said: “Rising rents are tempting landlords to dip a toe back into the slowing sales market to try and pick up deals they couldn’t have got six months ago.”

In April this year, nearly half (48pc) of investors were buying homes at above their asking price. In November, that share had plunged to 25pc. Landlords are negotiating much harder than owner occupiers. Nearly a third (30pc) of first-time buyers paid over asking price.

High mortgage rates have hammered buy-to-let profit margins, but if investors can purchase mortgage-free, they benefit from high rents. “With sellers more open to negotiation and rents rising rapidly, returns for equity-rich landlords have been rising,” Ms Beveridge said.

Landlords are targeting high rental yields instead of investing for capital growth in preparation for house price falls. So far this year, 56pc of new investor purchases were in places with average gross yields of 6pc and above. A decade ago, this share was only 40pc.

Of the homes sold by investors, 85pc were generating yields of less than 6pc.

Nationally, rents on newly-let properties jumped by 7.9pc in November. In Scotland, they soared by 12.3pc, the fastest rate of any region in Britain. This was also the highest level in Scotland since the Hamptons lettings index was launched in 2012.

A rent freeze was introduced for existing lets in Scotland in September, but this does not apply to newly let properties and means that landlords are more likely to make bigger increases when tenants leave.

Hartlepool in the North East had the highest gross rental yields in the country in November at 9.9pc. All of the highest yielding locations were in Wales or the North of England.



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