Countrywide Lettings Index - July 2016

Press Office

Thursday, July 14, 2016

Proportion of sales to landlords drops to a five-year low

The June Countrywide Lettings Index shows that in the three months after the introduction of the new stamp duty surcharge (Q2 2016), landlord purchases accounted for only 8% of all homes bought, the lowest proportion since 2010 and 5 percentage points lower than the same period last year. This comes following the surge in activity in the first quarter of the year, where landlords accounted for 18% of home buyers, the highest proportion seen since our records began in 2010, as they raced to beat the stamp duty change.

The largest change in landlord activity was in the North, Midlands and Wales. In the North East, after 29% of home sold were bought by landlords in Q1, this fell to 9% in Q2. Similarly, in Wales and the East Midlands, this fell from 19% to 3% and 22% to 8% respectively.

The increased purchase activity from landlords at the start of 2016 has led to the number of homes available to rent increasing by 22% in June compared to last year. London and the South West have seen the largest growth in homes available to rent, the number rising by 33% and 55% respectively. Increasing supply, as well as affordability barriers, has reduced the rate of rental growth with most regions seeing slower growth rates throughout the year.

Overall, average rents in Great Britain rose to £960 in June, 3.6% higher than last year. This is the highest growth in the year so far, but still 0.2 percentage points slower than the rate in June last year.

Commenting, Johnny Morris, Research Director at Countrywide, said:

“The lull in landlord activity is mostly due to investors bringing forward purchases in the first three months of the year to beat the April Stamp Duty deadline.  But upcoming changes to mortgage tax relief and the prospect of heightened uncertainty in the economy during the lead up to the referendum, will also have made investors warier of entering the market.

“Those extra homes bought by landlords at the start of the year are still making their way to market.  Despite tenant numbers still growing, the increased supply is slowing rental growth.”

Chart 1: Proportion of Sales to Landlords

 

 

 

Table 1: Proportion of home sold to landlords

Region

Q2 2016

Q1 2016

Q2 2015

East Midlands

8%

22%

15%

East of England

8%

17%

12%

London

9%

17%

13%

North East

9%

29%

13%

North West

8%

16%

12%

Scotland

4%

10%

9%

South East

7%

18%

15%

South West

9%

18%

13%

Wales

3%

19%

14%

West Midlands

12%

24%

16%

Yorkshire and the Humber

9%

20%

12%

Great Britain

8%

18%

13%

 

Table 2 – Rental Prices for New Lets

Region

Ave Rent Jun-16

Ave Rent May-16

Ave Rent Jun-15

June Rent YOY

Greater London

£1,294

£1,292

£1,264

2.4%

Central London

£2,448

£2,616

£2,418

1.2%

East of England

£978

£972

£890

9.9%

South East

£1,241

£1,210

£1,207

2.8%

South West

£831

£825

£827

0.5%

Midlands

£696

£668

£670

3.9%

North

£698

£668

£664

5.1%

Scotland

£710

£708

£666

6.6%

Wales

£700

£644

£701

(0.1%)

Great Britain

£960

£945

£927

3.6%

 

Table 3 – Rental Prices for Renewed Contracts

Region

Ave Rent Jun-16

Ave Rent May-16

Ave Rent Jun-15

June Rent YOY

Greater London

£1,201

£1,210

£1,147

4.7%

Central London

£2,482

£2,617

£2,441

1.7%

East of England

£886

£902

£829

6.9%

South East

£1,130

£1,184

£985

14.7%

South West

£798

£795

£725

10.1%

Midlands

£649

£660

£622

4.3%

North

£624

£639

£615

1.4%

Scotland

£632

£640

£630

0.4%

Wales

£620

£661

£639

(3.0%)

Great Britain

£886

£907

£840

5.5%

 

Table 4 – Rental prices for all occupied units

Region

Ave Rent Jun-16

Ave Rent May-16

Ave Rent Jun-15

June Rent YOY

Greater London

£1,219

£1,215

£1,147

6.3%

Central London

£2,425

£2,488

£2,441

(0.7%)

East of England

£884

£881

£829

6.6%

South East

£1,002

£1,000

£985

1.7%

South West

£745

£743

£725

2.8%

Midlands

£637

£636

£622

2.4%

North

£630

£629

£615

2.4%

Scotland

£641

£641

£630

1.7%

Wales

£650

£654

£639

1.7%

Great Britain

£867

£866

£840

3.2%

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