Rents set to rise as massive numbers of BTL landlords retire
Nearly 140,000 buy to let landlords retired from the sector last year - and another 96,000 landlords will look set to sell up as they turn 65 over the coming year, research reveals.
The findings from estate agents Hamptons highlight that the number of ‘baby boomer’ landlords who retired in 2022 accounted for 73% of all landlord property sales.
And the knock-on effect could see rents rising because those properties are leaving the sector and younger landlords are not investing.
The landlords who are retiring are among the first to invest in buy to let mortgages when they were unveiled in 1996.
Landlords who will turn 65 and decide to retire
Hamptons also says that the number of landlords who will turn 65 and decide to retire will be around 100,000 every year – and numbers will reach a new peak within five years.
There are already nearly one million landlords in Great Britain over the age of 65.
Their findings highlight that between 2010 and 2022, the number of retiring landlords doubled - and look set to grow further as the population grows older.
The research also reveals that most of the privately rented homes in the country are those that were bought by landlords between 15 and 25 years ago.
And 51% of outstanding buy to let mortgages are those that were taken out by investors between 1996 and 2007.
The trend in landlords selling up To highlight the trend in landlords selling up, Hamptons’ lettings index reveals that 45% of the rented properties being sold in 2023 had been bought at least 15 years ago.
In 2018, the proportion of homes being sold that had been bought at least 15 years ago, was 33%.
The biggest proportion of sales by property type is low-rise city centre flats that were popular with investors when buy to let mortgages came out.
And it is in suburban London where retiring landlord sales are the strongest, with Redbridge seeing 60% of its landlord sales being for property that has been owned for at least 15 years, in Ealing it is 59%, in Harrow the proportion is 58%, while in Barnet it’s 55%.
‘A perfect storm approaching’
Simon Thompson, the managing director of Accommodation for Students, said: “There is a perfect storm approaching with those buy to let landlords who first entered the market now approaching retirement, looking to sell up.
“But the BTL investment environment has changed very much since then and younger landlords are either choosing not to invest because of increasing regulatory and tax changes or they simply don’t have the cash to buy.”
He added: “This is another situation that will leave renters at a disadvantage because most of the landlords that are leaving the private rented sector are selling to non-landlords which means that the
choice of homes for tenants will reduce and that will, unfortunately, increase competition and push up rents.”
