The latest Hamptons Monthly Lettings Index – March 2022, has revealed that the appetite to invest in property is on the rise again as the share of homes bought by landlords across Great Britain rose from 12.0% in Q1 2021 to 13.9% in Q1 2022. This year’s figure marked the highest proportion recorded in the first quarter of any year since 2016 when investors rushed to beat the 3% stamp duty surcharge on second homes that was introduced in April 2016.
Overall, investors bought 42,980 homes across Great Britain during the first three months of this year, equating to £8.5bn worth of property - nearly twice the figure (£4.6bn) recorded pre-Covid in Q1 2019.
The increase in buy-to-let purchases may help reverse the decline of the private rented sector, which shrunk from a peak of 5.3m homes in 2017 to 5.0m in 2021. For the first time since 2016, investors bought more properties than they sold. The share of homes sold by investors fell from 14% in 2021 to just 10% in Q1 2022, the lowest proportion in 10 years. This meant that there was a net gain of 13,480 rental properties in Great Britain in Q1 2022, compared to a 7,640 net loss in Q1 2021.
Investors are increasingly looking to the highest yielding areas of the country to maximise their returns and hedge against inflation. So far this year 71% of investors bought in the 50% highest yielding areas of the country, up from 57% a decade ago. It’s also one of the reasons why nearly three quarters (73%) of London-based landlords bought their buy-to-lets outside the capital this year, where yields tend to be higher, up from less than a quarter (24%) a decade ago.
The Northeast is the buy-to-let capital of Great Britain, where investors purchased 27.7% of homes sold in the first three months of this year, more than twice the share bought by first-time buyers (12%). It’s also the region that saw the biggest year-on-year rise in buy-to-let purchases. This may be unsurprising given that it offers the highest gross yields in the country, averaging 9.0% compared to 6.5% across England & Wales.