Landlords selling up buy-to-let make ‘£10,500 less than if they had sold in 2022’

Landlords selling up will typically make around £10,500 less than they would have done had they sold in 2022, analysis suggests.

So far this year, the average landlord in England and Wales has sold their buy-to-let for £94,800 more than they initially paid for the property, having owned it for an average of 11 years, according to estate agent Hamptons.

This gain has shrunk by around 10 per cent or £10,500 from a record £105,300 achieved last year, and is similar to what landlords selling in 2016 typically achieved.

The gains Hamptons has calculated do not include tax and other charges, which would eat into any profits made by landlords from selling up. Hamptons used Land Registry figures to make its calculations.

Smaller terraced houses and flats, which have seen weaker price growth in recent years, have made up a higher share of buy-to-let sales so far this year, Hamptons said.

Mortgage costs have increased sharply in recent months and may push some landlords to sell up.

The estate agent believes it is likely that the amount made by landlords selling up will fall further on the back of both lower prices being achieved and a rising proportion of sellers having bought later in the house price cycle.

Despite the slowing pace of price growth, the proportion of landlords selling for less than they paid is limited, Hamptons said.

It calculated that one in 16 (6 per cent) landlords have sold at a loss so far in 2023, slightly up from one in 20 (5 per cent) last year but down from one in 10 (10 per cent) in 2020.

However, nearly a fifth (19 per cent) of investors who sold a flat did so for less than they paid, researchers added.

Aneisha Beveridge, head of research at Hamptons, said: “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.”

She added: “Lower house prices and higher rents will combine to shore up the rental market as more landlords hold off on the decision to sell.”

Here are the average gross gains made by landlords selling in 2023, followed by 2022, according to Hamptons:

– London, £308,500, £319,300

– South East, £128,000, £140,300

– East of England, £112,000, £117,600

– South West, £95,700, £105,000

– West Midlands, £66,500, £71,800

– East Midlands, £64,000, £71,200

– Wales, £55,100, £62,900

– North West, £52,500, £58,900

– Yorkshire and the Humber, £44,800, £49,900

– North East, £22,200, £26,400