Buy-to-let investor sales have cooled despite tax and legislative reforms. Notwithstanding these developments, the buy-to-let market in 2022 as a whole has been able to adapt to them. This is a strong market signal for investor confidence in UK property.

According to data by London investment firm FJP Investment, the number of homes sold by landlords in Great Britain in 2020 reached a seven-year low of 131,900. However, landlords have had a limited number of opportunities to sell up in the past year.

During the first shutdown following the COVID-19 outbreak, the property market momentarily slowed. Landlords were also subject to eviction bans and six-month notice periods.

Recent tax and legal reforms have caused some buy-to-let investors to liquidate their properties. The buy-to-let market was predicted to see a huge migration of landlords. Many landlords and investors, on the other hand, have adapted and continue to find it a successful investment.

“Landlord sales have been very high over the last few years due to tax and regulatory changes that have reduced the profitability for many investors,” says FJP Investment CEO Jamie Johnson.

However, most of the landlords who would be most affected by these changes have already left the sphere, based on the fact that tax relief on mortgage interest will be completely phased out in 2021.

Investments for the longer run

Landlords who invest in buy-to-let properties for the long term receive the best profits. In the long run, the UK property market is poised for capital appreciation and rental demand growth. As a result, it remains an attractive long-term investment.  In recent years, a depreciation in capital gains has been observed. However, this tendency appears to have been reversed despite the pandemic, resulting from higher housing prices.

As Jamie Johnson observes “Landlords who have been in the game for the longest period of time have reaped the biggest rewards. The average landlord who owned their buy-to-let for more than 15 years made more than three times more than a landlord who had owned their property for less than five years. Many of whom would have renovated and invested further in their property to add value”.

Home price growth is expected to take place in the north of England in the coming years, according to forecasts. In order to take advantage of price increases, many buy-to-let investors want to get a foot in the door as soon as possible.

Approximately 65 percent of landlords in the private rental sector believe the industry has deteriorated. Regulatory, legislative, and tax increases are mostly to blame.  Despite this, long term confidence means 79 percent of the landlords questioned believe they will still be landlords in five years. Clearly, buy-to-let is still seen favourably by many. Buy-to-let is also becoming increasingly popular among first-time landlords.

Outside of London, rental demand is increasing

March 2021 saw a 4.4% increase in the average rent for newly rented properties in Great Britain compared to the same period previous year. The biggest rental growth rates continue to be seen in areas outside of the city.

In locations outside of London, rents climbed by 6.8 percent yearly. The yearly rental growth outside of the capital has already exceeded 5 percent for three months straight. Except for London, every English region had a rental rise of at least 4 percent.

As city centre rental queries soar, major cities throughout the UK are experiencing a surge in demand. It’s predicted that this trend will continue to grow in the coming months as more professionals return to the workplace.