Only 12% of homes sold in London last month were bought by an investor

Proportion approaches record low as focus shifts to the regions

Record numbers of London investors have been buying up properties in the regions as tax hikes and slower price growth continue to crush returns in the capital.

The proportion acquiring investment properties outside London has now hit 50%, according to Countrywide – that’s the highest level ever recorded and compares to just 19% in 2011.

In terms of numbers, London investors bought more than 22,000 homes outside the capital last year, which was up from 3,300 in 2010 and works out as more than the total sold in Manchester and Birmingham combined (21,951).

The East has the highest proportion of London landlords overall – one in five homes (26%) bought by an investor this year has sold to a London landlord – while the proportion in the North is now at 9% (up from 1% in 2010). Only 12% of homes sold in London last month were bought by an investor, close to a record low.

Tax is at the heart of all this, says Countrywide, pointing out that landlords buying in London face an average SDLT bill of £40,400 compared to £6,300 for an investor buying outside of the capital. Investors buying in London have seen the average SDLT bill rise by 73% since the pre-hike days of Q1 2016, whilst those buying outside of town have only had to swallow an extra 8%.

The increasing volume of stock on the market in London (11% up year-on-year) has pushed rental values downwards for the sixth consecutive month, taking the annual fall to -3.4%. The East (-0.1%) and Scotland (-1.0%) recorded small annual falls for the first time this year, while Wales posted a -2.5% decline. The average rent of a new let nationwide rose to £936 pcm in April, slightly up on the same period last year (£932).

Johnny Morris, Research Director at Countrywide: “In response to slower price growth and government tax hikes, London landlords are looking further than ever to find a return. Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.

“Rental growth remains low across Great Britain. Mostly driven by London where rents have fallen for the sixth consecutive month. The repercussions of the stamp duty rush are still playing out in the rental market as stock levels continue to remain high. But with fewer investors buying in the capital we will likely see stock levels fall, driving future rental growth.”

% of London investors buying outside of London

2010

22%

2011

19%

2012

23%

2013

28%

2014

35%

2015

35%

2016

47%

2017 (YTD)

50%

No. of homes bought by London based investors outside the capital

2010

           3,311

2011

           3,353

2012

           4,677

2013

           6,305

2014

         13,839

2015

         16,302

2016

         22,296

London investors as a % of all investors (2017)

East

26%

South East

16%

North

9%

Midlands

8%

South West

5%

Wales

<1%

Scotland

<1%

New Lets

Region

Ave Rent Apr-17

Ave Rent Mar-17

Ave Rent Apr-16

April Rent YOY

Greater London

£1,270

£1,289

£1,314

-3.4%

Central London

£2,440

£2,318

£2,499

-2.4%

East of England

£979

£991

£980

-0.1%

South East

£1,189

£1,170

£1,176

1.0%

South West

£859

£813

£807

6.3%

Midlands

£685

£671

£660

3.7%

North

£667

£658

£643

3.7%

Scotland

£659

£677

£665

-1.0%

Wales

£654

£645

£671

-2.5%

Great Britain

£936

£928

£932

0.5%

Occupied Homes

Region

Ave Rent Apr-17

Ave Rent Mar-17

Ave Rent Apr-16

April Rent YOY

Greater London

£1,237

£1,236

£1,212

2.1%

Central London

£2,369

£2,372

£2,451

-3.3%

East of England

£900

£897

£878

2.5%

South East

£1,021

£1,020

£1,000

2.1%

South West

£761

£760

£742

2.6%

Midlands

£649

£648

£635

2.2%

North

£652

£638

£627

4.0%

Scotland

£652

£653

£639

2.0%

Wales

£652

£654

£655

-0.4%

Great Britain

£878

£878

£864

1.6%

Source: Countrywide Research