Monday, August 24, 2015
Landlords in the UK sell their rental properties less often than the average homeowner. Research by Countrywide plc, the UK’s largest property services group including the UK’s largest letting agency, shows that in 2015 landlords who sold had owned their property for an average of 17 years. This is three years longer than the average homeowner and five years longer than in 2007 before the recession. While the change in average time between sales is affected by changing market conditions, landlords have consistently sold less often than homeowners in every year during the last decade.
The market downturn in 2008 saw the average time between sales for both landlords and homeowners increase. Between 2007 and 2010, the average time between moves by homeowners increased from 11 to 16 years while among landlords it grew from 12 to 20 years. The recession reduced the rate everyone sold property but it also widened the gap between landlords and homeowners. As the recovery took hold from 2011, the time landlords choose to hold their investments has fallen. The average time between sales by landlords fell from 20 to 17 years between 2011 and 2015. For homeowners the fall was from 16 to 14 years.
The private rented sector has been growing rapidly in recent years, there are 1.4 million more rented homes today compared to 2008 according to data from the English Housing Survey. While the growth of the sector has reduced upward pressure on rents in many areas, it will also have weighed on the recovery in housing transactions. Because landlords sell their properties less often than homeowners, if the private rented sector had not grown since 2008, an additional 100,000 property sales might have taken place.
While changes in the average time between sales gives insight into those active in the market, a large number of properties haven’t changed hands since the official Land Registry records began in 1995. Nearly 50% of the privately owned homes in the UK have not been sold in the last 20 years. However, among properties owned by landlords, this figures falls to 32%. Landlords do tend to buy and sell less often than homeowners, but the growth of the sector means a larger proportion of properties owned by them eventually come to the market.
Commenting Johnny Morris, Research Director at Countrywide says:
“Most landlords consider property to be a long term investment. With landlords keeping their properties for 17 years on average, there is more stability in the sector than is widely recognised. Long term investment decisions drive many landlords and two thirds of rented properties are owned without buy-to-let finance. This means many landlords are in a position to ride out short term market conditions in favour of expectations of future growth.
“As landlords trade less often than homeowners, the growth of the private rented sector weighs down on the number of housing transactions. Less liquidity in the sales market can cause local market distortions and impact labour mobility. As the private rented sector continues to grow it is likely we will see more owners searching for flexibility, blurring the lines between tenant and landlord by letting their properties while renting elsewhere.”
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