Why Are Landlords Selling Up?

by | Thursday 11th Apr 2024 | Mortgage News

Statistics show 1/3 UK landlords are considering selling up within the next year. Releasing thousands of properties for New Homebuyers.

Statistics show 1/3 UK landlords are considering selling up within the next year. Why are buy to let landlords selling up?

In a new development for the UK housing market, recent research from Uswitch has revealed a significant intention among landlords to sell their properties within the next year. This revelation marks a potential shift for the UK property landscape, with implications that could reshape the homeownership journey for many aspiring new homebuyers. So why are landlords selling up?

Landlords Consider Selling Properties. Why Are Landlords Selling Up?

Throughout 2023, buy-to-let (BTL) mortgages played a substantial role, comprising 7.5% of total mortgage lending. This statistic highlights the importance of landlords in the housing market ecosystem. However, the current wave of intentions to sell among landlords suggests a forthcoming surge in property listings, which could fundamentally alter the dynamics of homeownership.

The cost of buy-to-let borrowing e.g. interest rates and mortgage affordability has increased significantly in the last couple of years, and landlords are finding it more and more difficult to make a profit on their property investment and are having to increase rent just to make ends meet. That coupled with rising costs of bills and property maintenance and tax implications has led many landlords to consider selling up. But, this is of course not the sentiment of all landlords, and many are still finding it to be a very lucrative profession to be in. Are landlords selling up? Yes, some are but many are still thriving and earning a good living from their property investment.

Renting Vs. Owning

So now that we know why SOME landlords are selling up, what could this mean for the property market? The anticipated influx of properties into the market could be a unique opportunity for first-time buyers and existing homeowners seeking to move up the property ladder. For a long time the UK has suffered a battle between property supply and demand with both rental properties and properties entering the market. Leading to many people practically fighting over property when it does enter the market and subsequently driving the average property price higher. With a wider selection of properties to choose from in the future when landlords do sell, individuals may find themselves with increased options and flexibility, potentially bridging the longstanding gap between renting and owning.

Looking closer at the data, the surge in buy-to-let mortgage advances in Q3 2023, totalling £4.7 billion, suggests a fairly optimistic market. Despite this apparent momentum, the shift in landlords’ intentions to sell indicates a changing tide. This shift not only reflects the individual decisions of landlords but also hints at broader market trends that could favour prospective homebuyers.

Demographics For New Homebuyers In The UK

Demographic insights provide further clarity, revealing borrowing patterns among different age groups. Individuals aged 40 to 49 emerged as the most active borrowers throughout the year, indicating a diverse pool of potential buyers poised to capitalise on the emerging opportunities in the housing market. The average age of a first-time buyer in London is creeping towards 40 day by day, so this figure is not too far off the mark. Regionally, London also stands out as a focal point of buy-to-let activity, boasting the highest average loan value for new property purchases in the UK. With an average value of £272,052 recorded in March 2024, the capital presents a compelling destination for investors and hopefully new homebuyers alike.

The Future Of UK Property Prices

Looking ahead, industry experts paint a positive picture, forecasting a rise in house prices across all regions over the next 12 months. This optimistic outlook, combined with an uptick in new listings and appraisal activities, signals a promising trajectory for the housing market, underlining the potential benefits awaiting prospective buyers and landlords looking to sell.

Buy-To-Let Landlords AND New Homebuyers Need To Speak With A Mortgage Broker

As new properties enter the market or are slated to do so in the near future, it becomes imperative for prospective buyers to take proactive steps towards achieving homeownership. And for those landlords who are still doing well in 2024 and are considering re-structuring their mortgage terms, you will also benefit from the help and guidance of a mortgage broker. Consulting with a qualified mortgage broker, such as ourselves at Oportfolio Mortgages, can provide invaluable guidance on navigating things like mortgage affordability and ensuring buyers are well-equipped for when that dream property does come on to the market.

While the decision of landlords to sell their properties may mark a notable shift in the rental market, in our eyes it presents an unprecedented opportunity for residential buyers. With a diverse array of properties set to hit the market, now is the opportune moment for aspiring new homeowners to explore their options and embark on the path towards homeownership. If you or anyone you know is interested in purchasing a property within the next 12 months, please feel free to give our mortgage advisors a call. We are here to help.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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