The UK is witnessing a significant decline in the number of property purchases by landlords, with transactions hitting an unprecedented low in the first half of 2024. According to recent data from Hamptons, a mere 29,600 homes were acquired by landlords during this period, marking the smallest volume of purchases since such records began in 2006.

The current figure represents less than half of the 60,300 transactions recorded in the same timeframe back in 2015. This dramatic decrease is attributed primarily to rising mortgage rates, which have surged by over 2% since early 2022. As a result, the financial appeal of buy-to-let investments has waned considerably. In the first half of 2023, landlords constituted 10.6% of the housing market. This figure has now dropped to just 8.4%.

Research by Hamptons indicates a shift in market dynamics, with homeowners becoming the dominant buying group for properties previously owned by landlords. In the first half of 2024, 71% of such homes were purchased by owner-occupiers, up from 63% a decade ago. This trend is most pronounced in regions like London and the South East, where owner-occupiers acquired 78% of former rental properties, compared to 59% ten years prior.

Moreover, buy-to-let investors are increasingly targeting new build properties. Approximately 47% of homes purchased by landlords in the first half of 2024 were new builds, a significant rise from 35% in 2015. Notably, more than half of new build apartments and terraced houses were bought by landlords, highlighting a preference for properties requiring minimal maintenance.

Aneisha Beveridge, head of research at Hamptons, comments on the changing landscape, “The surge in mortgage rates has dealt a severe blow to the buy-to-let market. The attractiveness of such investments has diminished, leading to the lowest level of landlord purchases in nearly two decades.”

While the landscape for landlords may appear challenging, Beveridge suggests there might be a silver lining for prospective investors. “With house prices experiencing a downward adjustment and sellers becoming more amenable to price negotiations, there could be potential opportunities for landlords ready to enter the market in the latter half of the year,” she adds.