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Investors flock to high-yield rental markets as inflation bites

Hamptons says mini boom this year could make up for the shrinkage seen in recent years caused by government policies.

Nigel Lewis

landlords buy to let inflation rental

High interest rates have prompted more investors to buy properties in the highest-yielding rental markets in order to maximise their returns and hedge against inflation, says Hamptons.

This has prompted a net gain of 13,480 rental properties in Great Britain between January and March, compared to a 7,640 net loss in 2021 during the same period.

Hamptons new report also says investors purchased 13.9% of homes sold across Great Britain during the first three months of the year, the highest proportion recorded during this period of any year since 2016 when landlords rushed to beat the introduction of the 3% stamp duty surcharge on second homes (15.9%).

This increase in buy-to-let purchases may help reverse the decline of the private rented sector which shrunk from a peak of 5.3m homes in 2017 to 5.0m in 2021.

The North East saw the biggest year-on-year increase in buy-to-let purchases as investors bought 28% of homes sold in the region, more than twice the share bought by first-time buyers.

Rental

Link to Hamptons news“Tax and regulatory changes have weighed heavily on the buy-to-let sector over the last five years causing more landlords to sell up at a time when fewer new entrants were looking to buy,” says Aneisha Beveridge (pictured), Head of Research at Hamptons.

“As a result, there are around 300k fewer privately rented homes in Great Britain today than at the peak of the sector in 2017.

“While we expect investors to continue purchasing at around the same rate over the course of 2022, it’s unlikely to be enough to make up for the full loss of rental homes during the last five years.”

April 11, 2022

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