Recent media speculation suggests that landlords are leaving the rental sector in droves, driven by tighter regulations and increased taxation. However, the reality paints a different picture. While some landlords have indeed chosen to sell, many are simply reaching the end of their planned investment journey, particularly as they approach retirement. But what’s really happening in the UK rental market, and is buy-to-let still a viable option?
Understanding the rise in ex-rental properties for sale
According to Rightmove’s latest report, the number of previously rented homes hitting the sales market is at a record high. Currently, 18% of properties for sale across Great Britain were previously available to rent, a significant jump from just 8% in 2010. London leads the trend, with 29% of homes for sale having previously been rental properties. Scotland and the North-East are close behind at 19%.
While this increase might seem alarming at first glance, the five-year average for ex-rental properties on the market stands at 14%, indicating that the rise isn’t as dramatic as it may appear. Tim Bannister, Rightmove’s property expert, explained, “Despite the trend of more landlords choosing to sell up, it doesn’t appear to be a mass exodus, and we will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale.”
The homes being sold could potentially benefit first-time buyers by offering more options, or they might be purchased by other landlords, signalling more of a “changing of the guard” than a complete exit from the market.
Is buy-to-let still a worthwhile investment?
For landlords who do their research and manage their properties professionally, buy-to-let remains a highly viable investment. The rental market continues to offer returns that often surpass those of other financial ventures, especially as rents have been rising faster than inflation.
“Provided you conduct solid research into the local market, buy well, and ensure the property is let and managed professionally, you can still generate a rental income yield that’s in excess of the returns you could get from other financial investments,” an industry expert noted. Moreover, with property prices on a steady upward trajectory, equity gains over the long term remain an attractive prospect.
Successful buy-to-let investments, however, require a medium to long-term outlook, typically around 15 years or more, to navigate market fluctuations and achieve optimal returns.
The impact of Section 21 and rental reforms
The much-discussed scrapping of Section 21 ‘no-fault’ evictions in England, alongside other rental reform proposals, has raised concerns among landlords. Yet, experts suggest that good landlords, especially those working with qualified agents, have little to fear. Most tenancies end when tenants choose to leave, not when landlords ask them to move out.
A more regulated rental sector with higher standards is widely seen as a positive development. With demand for rental accommodation expected to rise and social housing construction lagging behind targets, private landlords remain crucial to meeting the UK’s housing needs. “We certainly need private landlords to keep investing,” Bannister emphasised, pointing to the sustained demand for rental properties.
Is the future bright for landlords?
Despite the noise around a potential landlord exodus, the data suggests a different story. Many properties sold by landlords are being snapped up by others keen to expand their portfolios, and the proportion of households renting in the private rented sector has remained stable over the last decade.
With rental demand strong and property investments continuing to offer favourable returns, buy-to-let remains a lucrative option for those willing to commit to long-term strategies. While landlords must adapt to changing legislation and market conditions, there’s little evidence to suggest that the rental sector is in decline. In fact, the future may still hold plenty of opportunities for savvy investors in the UK housing market.
