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Telegraph
3 days ago
- Business
- Telegraph
Why the worst of the landlord exodus may be over
For years, the rental market has been battered by an exodus of landlords as successive governments' crackdowns have made it ever tougher to turn a profit. The number of UK properties available to let hit an all-time low of 284,000 in March, tumbling 18pc in a year, according to analytics firm TwentyCi. The figure is 23pc lower than before the pandemic. The market has been saturated by the huge number of ex-rental properties that have been put up for sale. In the first quarter of this year, 15.6pc of properties newly for sale had been rented at some point during the past three years, up from just 9.3pc at the start of 2023, according to TwentyCi. The supply shock has driven up rents, which were 4.5pc higher on average in the first quarter of 2025 compared to the same period the year before, according to Rightmove data. But the worst of the landlord exodus may have passed – and pressure on tenants may begin to finally ease. Smaller landlords squeezed out It has been a tough period for landlords. Tax credits on mortgage interest for landlords were gradually slashed between 2017 and 2020, down from 40pc for higher-rate taxpayers to a flat rate of 20pc. Interest rates leapt, with buy-to-let mortgages at the sharper end of the increases, squeezing landlord profits even as rents rose. And thanks to Chancellor Rachel Reeves's maiden Budget, landlords now pay an extra 5pc stamp duty surcharge on additional property purchases. A major sweep of reforms designed to protect tenants was introduced to Parliament in 2023, and is set to take effect in July, which will ban no-fault evictions, fixed-term tenancies, bidding wars and mid-contract price hikes. Rental properties that fall short of energy efficiency standards are also set to be banned by 2030, with landlords facing an average bill of £10,000 to make sure their homes are compliant. The tax changes that began taking effect in 2017 arrested the growth of the private rental sector, which has been split between landlords who can afford to operate in a much tougher environment, and those that cannot. This has caused it to undergo a major restructuring in recent years, explains Richard Donnell of Zoopla. Smaller landlords have struggled and sold up while larger ones have actually grown. 'The number of landlords with one or two properties has fallen, as the smaller landlords have been more likely to leave. They didn't buy a property to have as a business… Almost 40pc of landlords bought their first property to live in, so there are a lot of accidental landlords in the business.' In 2016, over 60pc of landlords owned just one property, and under 10pc of landlords owned five or more – today, just 45pc of landlords own a single rental property, while 17pc own five or more. More significantly, single-property landlords are responsible for just 21pc of tenancies, while the minority of landlords with five or more properties provide nearly half. This change in the make-up of the rental sector has made it more resilient, and it has adapted to the challenges it faces today, argues Donnell. 'We're coming up to a decade since the private rental sector's growth began to stall,' he adds. 'I think we're through the worst of it now.' Many landlords who only owned one or two properties may have initially purchased them for the potential for house price growth. But that has stalled in recent years – the average UK house price jumped 10.4pc in 2021 according to Nationwide, but was 4.7pc last year. As mortgage rates have risen, smaller landlords with higher debt ratios have seen their margins plummet. Today, just 30pc of landlords have mortgages with a loan-to-value of over 50pc, according to Zoopla. Donnell adds: 'Back in the day, house prices were roaring away, and [landlords] didn't need to think about cash flow. Now, you need to have low levels of debt to make it work. 'Those who bought properties to live in and ended up renting them out [have been forced out of the market by] tax changes, rising running costs, and mortgage rate changes.' Threats are not existential for remaining landlords The larger, wealthier landlords that remain in the sector are more equipped to deal with the challenges, says Lucian Cook, of estate agent Savills. 'Wealthier landlords can deal with higher levels of regulation – they can spread risk with some tenants who do not perform across a wide number of properties. It is much more painful if you have bad tenants and just one or two properties.' Landlords with larger portfolios can also deal better with higher energy standards, he adds. 'If you're a landlord without lots of debt and leverage, the Renters' Rights Bill [due to come in later this year] shouldn't scare you too much,' adds Richard Donnell. The shift towards a more professional sector can also be seen by the rise in the number of landlords setting up limited companies to make their businesses more profitable, which is at a record high, according to data from estate agent Hamptons. Around 61,000 limited companies were created in 2024 for buy-to-let purposes, up from just 50,000 the year prior. '[To shift into this company structure] is really expensive because of stamp duty and capital gains tax,' explains Hamptons' Aneisha Beveridge. 'Landlords wouldn't do that unless they were planning on staying in buy-to-let for a few years. They are adapting and taking shelter in these limited companies instead of offloading entirely.' Gross annual yields from residential rental properties are on the rise – in Manchester, they sit at 6.9pc, up from 6pc in 2022, according to Zoopla's rental index. In London, yields remain relatively weak at 4.9pc, but have risen from under 4pc in 2021. 'The undersupply of private rented stock has been entrenched,' adds Cook. 'The landlords who have remained in the sector have benefited from some rental growth along the way. Even the more indebted ones, with mortgage rates falling slightly, combined with rental growth, have strengthened their resolve somewhat.' A boost for first-time buyers While landlords that remain in the rental sector are unlikely to be forced out of it, the growing barriers to entry are putting off new ones, Beveridge explains. 'The hurdles to invest in buy-to-let are much higher; you have to know what you're doing now more than ever before. Just 10pc of homes are being bought by landlords.' This is a record low, down from 16pc in 2015. Donnell adds: 'Consumers are waking up to the running costs of property. Higher mortgage rates, gas bills, council tax, maintenance… Everything is going up.' A sluggish sales market has been made worse by a hike in stamp duty, including for thousands of first-time buyers, some of whom face an additional £6,250 in taxes. This has meant that some landlords have only held on to their properties as they have not been able to fetch a price they are happy with. But this may be about to change as the Bank of England relaxes stress-testing, with lenders set to allow borrowers to take out mortgages of up to £40,000 more than previously allowed. This will give first-time buyers at the top of the rental market a boost, many of whom will be looking at purchasing previously rented homes, as they tend to be cheaper. 'A relaxation of mortgage regulations, which gives first-time buyers more buying power to step into the shoes of buy-to-let landlords, means you could have a second wave of the less committed landlords looking to sell,' adds Cook. Beveridge points out that there may be a number of landlords who are yet to refinance on to more expensive mortgages. 'It won't be until 2027 that that will be fully bedded in, due to five-year fixed rate mortgages [which began in 2022]. We might see some people choose to sell as a result of that, but for the majority of people it's already happened.'
Daily Mail
31-05-2025
- Business
- Daily Mail
EXCLUSIVE When are rents cheapest? The best months to bag a bargain in London, revealed
Renters could save themselves hundreds of pounds by moving home during certain months of the year, data shared with This is Money reveals. The autumn and winter months are generally the cheapest time to sign up to a new tenancy agreement, according to data crunched by analytics firm TwentyCi. Specifically, in November, December, January and February prices tend to be lower meaning it could be possible to bag a bargain. Meanwhile, rents reach their highest in August and September. The analysis focused on rents in London, which accounts for roughly a third of the private rental sector in England. Last year, the average new tenancy agreed in London in December last year was for £2,151 a month - hundreds of pounds cheaper than the average rent agreed in September. Those agreeing a new contract in September would pay £343 more, at £2,494 a month. The second most expensive month is August at £2,432. There were big savings to be had for those who agreed new tenancy agreements in November and January as well. The average rent agreed in November was £2,226 a month while the average rent agreed in January this year was £2,198. In 2023, average rents peaked in August and September at £2,453 a month respectively before falling back through autumn and winter. The average new rent agreed in December 2023 was £2,186 a month representing a £267 monthly saving compared to August and September. TwentyCi also checked the rents agreed in each given month in another major city, Birmingham. Here, rents averaged £1,107 a month in January 2024 before peaking in July at £1,148 a month. They then fell back, reaching a low of £1,103 a month in November. What does this mean for renters? The analysis suggests that rents are lower in the first four months of each year and start to rise, peaking in August or September before prices fall again in the final months. In December 2024 for example, newly agreed rental prices were 8 per cent lower than the yearly average of that year while in September they were 5 per cent higher. It means that savvy tenants who plan to move home this year may be wise to wait until closer to Christmas, when there is less competition and more room for negotiation. That is, if they aren't tied to the end of a contract at a specific time. Marc von Grundherr, director of Benham and Reeves estate agents, claims that renters who move during the busiest months can often find themselves offering 10 or 20 per cent above the 'asking' rent in order to compete with other potential tenants. 'Tenants can often face a premium if they choose to make their move during a busy period, but this premium is often driven by the tenant, not the landlord,' said von Grundherr. 'The summer months are often by far the busiest as students look for accommodation ahead of the academic year, whilst many families will also move to get settled before school starts. 'This rush can often run from late June right through until September and, as a result, we see an extremely high number of renters all fighting it out for a limited supply of stock of all property types. 'As a result, it's not unheard of for tenants to offer above and beyond the asking rent in order to secure a property, often without even viewing it, and this can be as much as 10 to 20 per cent more. 'Or, they will pay as much as six to 12 months rent in advance.' What if tenants can't avoid peak times? Many renters ultimately don't have much choice in deciding when to move. They might be tied into a contract until a specific date, have been asked to leave by their landlord, or they may be a student who lives with their parents in the holidays. But those that can't time the market can at least give themselves a chance of jumping to the front of the queue. 'The best advice for those looking to move during peak times is to be extremely prepared with respect to the required time to view, the budget needed for a deposit and the paperwork required for a letting agent,' adds von Grundherr. 'You can also pre-register your interest with agents so that you are at least near the front of the queue when a suitable property hits the market. 'Once you do find a property you like, be prepared to act very fast and seal the deal within the same hour of viewing.' Von Grundherr has some advice for landlords as well, advising them to try and arrange tenancy agreements to end during the busiest months of the year. He says: 'For landlords, having a tenancy agreement end during a low demand period can result in a lengthier void period. 'It's well worth planning any tenancy agreement to run over these low-demand periods, even if this means an unusual tenancy length of 18 months for example.' Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Telegraph
27-05-2025
- Business
- Telegraph
Labour's war on landlords sends rental property supply to an all-time low
The rental market is experiencing a supply crisis as landlords sell up amid an increasingly hostile business environment, new data has revealed. The number of UK properties available to let has hit an all-time low of 284,000, tumbling 18pc in the year to March, according to analytics firm TwentyCi. The figure marks a 23pc fall compared to the number of lets available before the pandemic. A third of landlords are now looking to sell off some or all of their rental properties, according to the latest English Private Landlord Survey, while the number of respondents leaving the lettings industry altogether quadrupled from less than 20,000 to over 80,000. Among landlords planning to scale back operations or sell up entirely, 'recent legislative changes' was the most-selected reason for their plans (65.6pc). This is not surprising – in her first Budget, Chancellor Rachel Reeves raised stamp duty on second homes and buy-to-lets from 3pc to 5pc with immediate effect. In the first quarter of 2025, 15.6pc of properties newly for sale had been rented at some point during the past three years, up from just 9.3pc at the start of 2023, according to TwentyCi. Meanwhile, the Renters' Rights Bill, set to take effect in July, will ban no-fault evictions, fixed-term tenancies, bidding wars and mid-contract price hikes. Rental properties that fall short of energy efficiency standards are also set to be banned by 2030, with landlords facing an average bill of £10,000 to bring their properties up to code. Unfortunately for landlords, the bad news may not stop there. Labour MPs want to increase the amount of tax landlords pay on rental income, The Times reported last week. This move would help the Government raise money while keeping its promise to not raise taxes on 'working people' – with Sir Keir Starmer having previously suggested that landlords do not meet the definition. HM Revenue and Customs (HMRC) filings show average property income declared came to £16,700 in the 2022-23 financial year, the latest for which data is available, down 10.8pc since 2018 in real terms. 'The kind of fall [in the number of rental properties available] supports our long-held view that government policy is dissuading investment and driving landlords to look elsewhere for returns,' said Chris Norris, chief policy officer at the National Residential Landlords Association (NRLA). 'There is an acute imbalance between the demand and supply of homes in this country, which is being exacerbated by successive governments' policies towards private renting.' Tenants are paying the price for an exodus of landlords from the market, which is pushing monthly rents to new highs. Average UK rents were 4.5pc higher in the first quarter of 2025 compared to the same period the year before, according to Rightmove data. TwentyCi's data also revealed that almost half – 46pc – of available properties to let are listed at prices exceeding £1,500 per calendar month, with over 15pc requiring tenants to fork out more than £3,000 each month. Angharad Trueman, president of property professionals' body Propertymark, said: 'This continues to be an ongoing concern in regard to the unintended consequences of the Renters' Rights Bill as if this trend continues, supply levels will worsen and consequently, so will rent costs. 'Tenants, who the legislation is designed to help, will ultimately be left feeling the brunt of this national issue. We need urgent Government support to revitalise the market and encourage investment before it's too late.' A Ministry of Housing, Communities and Local Government spokesman said: 'We do not recognise this data. Recent figures show that there has been an 18pc year-on-year increase in the number of available homes to rent, and the supply and demand balance is narrowing.'
Daily Mail
14-05-2025
- Business
- Daily Mail
Central London property prices have crashed and 'nobody wants to talk about it' warns buying agent
Home sellers in central London are facing a reality check that few of them want to accept - their properties may well be worth less than what they paid for them. While many estate agents continue to talk the market up, data suggests prime London property is struggling. Several central London boroughs have seen prices fall by more than 20 per cent within the last four years, with one borough seeing its house prices plummet 25 per cent in just two years. Of the top 10 most challenging postcodes to sell a home in across the country, eight are located within the capital, according to the latest data from TwentyCi. Its data analysis factored in sold prices compared to original asking prices, how fast homes are selling, how likely a sale is to fall through and how likely a home is to have its asking price reduced. Currently, central London homes are achieving 96.1 per cent of their original asking price on average which is below the national average of 97 per cent. That means on a £1million initial asking price, the typical inner London property is selling for £961,000. Inner London homes are also less likely to sell at all, with only 37 per cent of listed homes going on to complete, compared with 55 per cent nationally. TwentyCi also found that 39 per cent of listings in the region undergo at least one price reduction compared to 37 per cent across the UK, and the fall-through rate stands at 25.5 per cent, above the national average of 24 per cent. Each property is taking on average 89 days to sell in London, which is slower than the national average of 84 days. Where in the capital are prices crashing? The situation in certain postcodes paints an even bleaker picture - and in some cases, there appears to be a full blown market crash playing out. Properties in Marylebone are achieving an average of 88.1 per cent of their original asking price. This would mean someone first listing for £1 million is typically selling for £881,000. In Marylebone, 35.5 per cent of homes that go under offer also fall through, according to TwentyCi - far above the UK average of 24 per cent. In parts of Belgravia, Knightsbridge and Chelsea, it's taking 201 days to sell a home on average - almost two and half times longer than the national average. Meanwhile, close to half all homes listed in Pimlico undergo at least one price reduction, according to TwentyCi. That compares to 37 per cent of homes across the UK. It may not come as a surprise that house prices in these areas are also falling, and in some cases plummeting. In the City of Westminster, average house prices have fallen 25 per cent since they peaked in January 2023 and are still below 2014 prices. The average home is selling for £920,000, based on latest Land Registry data, down from a high of £1,225,000. In Kensington and Chelsea, average house prices are down 28.5 per cent since they peaked in October 2021 and still remain below 2014 levels. The average home is selling for £1,183,000, down from a high £1,653,000. 'There's something strange happening to the top end of the London market but nobody wants to talk about it,' says Henry Pryor, a professional buying agent. 'Some estate agents worry that if they voice it, then it will make it true, but ignoring it just prolongs the agony. 'However, if you're buying or selling you need to hear this. The market isn't as strong as it was. 'What most people aren't being told is that while sellers of £1million plus homes think that it's 2021, but most buyers think it's 2015. 'The froth has come off the market and privately most estate agents will admit it's a buyers market.' Why are central London property prices falling? There could be all manner of factors causing prices to fall. Higher interest rates, Brexit, stamp duty and changes to non-dom tax rules causing millionaires to leave the UK. The proportion of overseas buyers registering with Countrywide group estate agents to buy a home in the UK fell in the first three months of 2025 to the lowest level on record. Many of the capital's super-rich are looking to get out, according to Jonathan Hopper, chief executive of buying agent, Garrington Property Finders. This is pushing prices down sharply. 'Rising taxation and political uncertainty have led many wealthy UK residents to reassess their presence here, and a rapid recalibration of London's prime property market is underway,' said Hopper. 'Some of those leaving Britain have chosen to sell their London homes, but we're starting to see a strategic shift as others retain their UK property assets and turn to the increasingly attractive lettings market instead.' David Johnson, managing director of property consultancy INHOUS also says wealthy investors are looking to sell up and move their money elsewhere. He also thinks that many sellers and estate agents are guilty of putting homes on the market at too high a price. 'Some areas within central London have recently seen an uplift in the number of properties being put up for sale as a number of wealthy investors decided to move on amid new tax regulations and global political as well as economic developments,' says Johnson. 'It is also not uncommon to see properties come onto the market 20 per cent overvalued. This is a combination of vendor expectations and an agent telling the vendor what they want to hear in order to gain control of that property.' One major issue for the London market is stamp duty, according to Johnson. A home mover buying a £1million property now faces stamp duty costs of £43,750. For someone buying a second property in London worth £1million, either as a pied-à-terre or investment, they will pay £93,750 in stamp duty, while an overseas buyer will see that rise to £113,750. 'A lot of buyers are no longer purchasing smaller properties in any of these locations as it doesn't make sense to buy a property if they plan on selling within two or three years' time,' adds Johnson. 'Instead, these buyers are choosing larger properties further out that they can stay in for five years or longer.' Buying agent Henry Pryor thinks it's more simple than just tax and politics. He suggests it is just a case of too many homes for sale and not enough buyers. Pryor may have a point. The number of homes priced at over £5million coming onto the market in February was up 30 per cent compared to the same month last year, according to the latest data from LonRes. 'It's not because of Liz Truss or Brexit or non-doms fleeing the country,' says Pryor. 'It's not because of interest rates, Ukraine or what's happening in The White House. It's because people will no longer pay whatever it takes. 'Overall stock is up. If you want to buy a big house or flat you have some great homes to choose from, but many buyers are just not sure if they want to pay the ticket price and many are waiting and watching rather than piling in. 'There are exceptions, of course but the days of joining 15 other eager buyers for an open house on a Saturday morning are a memory. City of London house prices are down 23 per cent since January 2022 'Well priced properties are still being tied up via 'best and final offers' but I'm finding that many only have two or three bidders rather than 10.' While prices in Central London appear to be in the doldrums, this could present a window of opportunity for those prepared to be brave and buy the dip, according to Pryor. 'Summer is coming, it will get hotter but the housing market looks like it will remain cool for the time being,' he adds. 'This may be the time to buy the million pound home you've always wanted but not because it's going cheap. It's just that not many other people want it just now.' Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Telegraph
01-05-2025
- Business
- Telegraph
London has become the hardest city to sell a home
Are you struggling to sell your London home? Share your story by emailing money@ For decades, London homeowners couldn't believe their luck as their investments snowballed in value. Everybody wanted a piece of the London property market and sellers had the power to dictate ever-higher prices. Between 1995 and 2015, the average price of a home in London leapt from £79,000 to £480,000, a 500pc increase, according to Land Registry data. Over the same period, the S&P 500 index – which measures the performance of large American stocks – increased by 160pc. During this golden age for house prices, even the most shrewd investors that managed to consistently outperform the stock market could have only dreamed of these kinds of returns. Today, the picture looks very different. Of the 10 hardest postcodes to sell a house in, eight are in London, according to property analytics firm TwentyCi. Regionally, the South East edges London as the toughest to sell a house in, while Scotland ranked as the easiest.
