The average buy-to-let investor who sold this year made £95k, £10k less than in 2022.
This is according to the latest Hamptons Monthly Lettings Index which shows that investors selling a buy-to-let so far in 2023 have made gains which were 10.1% lower than those who sold last year.
Landlords in every region recorded smaller gains than last year, with the North of England recording the largest drop in their gross return on sale.
In percentage terms, northern regions recorded the largest year-on-year falls. This reflects both slowing price growth and a shift in the type of home being sold.
Smaller terraced houses and flats, which have seen weaker price growth in recent years, made up a higher share of all buy-to-let sales so far this year.
Overall, 6% of landlords in England & Wales sold their buy-to-let for less than they bought it for, up from 5% last year.
Meanwhile 19% of investors selling a flat and 22% of investors in the North East sold for less than they paid.
There are currently just three regions where the average investor profit is still at six figures – London, South East and East.
Rents across the UK rose 9.9% on last year, the 27th consecutive month where rental growth has been running above 5%.
Commenting on the latest numbers, Hamptons head of research Aneisha Beveridge says:
“As house prices start to slip back, there are signs that the landlords looking to sell today may have missed the top of the market. Rather, some investors are consoling themselves with record-breaking rental growth which is slowly ironing out the arithmetic for landlords”.
She believes lower house prices and higher rents will combine to shore up the rental market as more landlords hold off on the decision to sell. On the flip side, this will also weigh down on the government’s capital gains receipts handed over by landlords selling up over the next few years.
Beveridge adds: “New homes coming onto the market continue to achieve record rents and in the short term it’s hard to see what would put concerted downward pressure on the pace of growth.
With around 35,000 landlords coming off fixed rate mortgages each month, the upward pressure on landlords’ costs marches on. In the run up to remortgaging, landlords are fighting to balance the books by paying down debt and hiking rents that have dropped below market rate.”
