Yahoo Finance Rents set to increase as ageing buy-to-let landlords retire
Ageing buy-to-let landlords are leaving the property market and selling up to retire, which will put more pressure on rents as the number of lettable homes available drops.
Around 140,000 landlords "retired" from the business last year, according to the estate agency Hamptons, accounting for almost three quarters of all property sales by buy-to-let investors.
As these landlords exit the market and sell their properties, newer investors are scarce as they need to borrow at higher costs.
The average two-year fixed mortgage for a landlord has risen from 3% to 5.62% over the past two years.
On a £200,000 interest-only mortgage, that's the difference between paying £500 a month and £937 a month.
Read more: House prices drop amid falling demand as rents keep increasing
Aneisha Beveridge, head of research at Hamptons, said: “While house price growth continues to slow, rents keep moving in the opposite direction.
“Tenants find themselves with a little more choice than they did last year, which has been reflected in a 10% increase in the number of tenants moving home.”
Around 140,000 landlords retired last year, accounting for the majority (73%) of all sales by investors. Many of these investors were early adopters of the first buy-to-let mortgages which were launched in 1996.
And the number is likely to continue rising over the coming years with around 96,000 landlords turning 65 each coming year across the UK. This is on top of the 924,000 landlords who are already over the age of 65.
Many are expected to sell rather than continue managing their properties in retirement.
In March, the average rent for a newly let home reached £1,236 per month. This is 10.8% or £121 per calendar month higher than the same month last year.
March saw the second fastest increase posted in any month after the 11.5% increase in May 2022.
Rental growth continues to be led by the capital, with average rents rising 16.2% — faster than anywhere else in the country. Inner London saw rents rise 18.5% over the last year to reach £3,046, with rents passing the £3,000 mark for the second month running.
Read more: Property: How to sell your house in a slow market
Meanwhile, the 15.6% growth posted in Outer London marked the fastest annual increase on record and takes average rents here to £2,013 per month.
The number of homes on the rental market stands 13% above last year’s record lows, but there are still 64% fewer homes available to rent across the UK than there were in March 2019.
Scotland continues to bear the brunt of the rental stock shortage, with the number of homes on the market down 39% year-on-year, more than in any other region by at least 10 percentage points.
Watch: Am I wasting my money by renting?
Download the Yahoo Finance app, available for Apple and Android.
