Buy-to-let properties in UK showed record growth in demand in 2022

  • April 28, 2022

Buy-to-let properties in UK showed record growth in demand in 2022

The UK property market is still hot and it is likely to stay that way, specifically the buy-to-let sector that is booming right now. Due to low interest rates and a rise in people's disposable income, investors are finding more opportunities to invest in residential properties in UK and landlords are finding ways to navigate legislative changes coming into effect.

The UK property sector has remained buoyant during the rough economic patch, with the most recent figures suggesting that market confidence is returning. The high demand for buy-to-let properties combined with an improved supply of residential dwellings has driven through transaction levels and is expected to continue over the coming months.

For those seeking a safe and low-risk investment opportunity, bricks and mortar is still the best way to go. With the right location, skills and strategy, you can produce consistent earnings, low vacancy rates and rent yields, a steady cash flow and capital gains. Many people are finding this attractive alternative to investing in the stock market.

People buying buy-to-let properties

If we closely look at the statistics for the first three months of 2022, we can observe that 13.9 per cent of total properties sold were bought for buy-to-let purposes by the landlords. According to Hamptons, last year this figure was 12% during the same period.

While comparing to historical data, we can see that the figures for the first quarter of 2022 are the highest percentage, since the first quarter of 2016 – when landlords invested in the UK properties to rent them ahead. In the first quarter of 2016, buy-to-let properties accounted for 15.9% of all the residential properties sold in the UK.

Stamp duty was introduced in April 2016…

In April 2016, the 3% stamp duty was introduced for second properties and buy-to-let property investments. Since then, the purchase of buy-to-let properties has reached around the 10% mark.

“While we expect investors to continue purchasing at around the same rate over the course of 2022, it’s unlikely to be enough to make up for the full loss of rental homes during the last five years. A lack of rental homes is one of the reasons why rents have been rising at such a pace over the last year. March set a new record for rental growth as rents bounced back from 2021 lockdown lows last March,” states Aneisha Beveridge, head of research at Hamptons.

Moreover, this is also the first time that buy-to-let properties are bought more than the properties are sold since 2016. It shows the growth that the rental market is currently experiencing.

Recent buy-to-let properties growth trend…

In the first quarter of 2022, 42,980 homes have been sold in the UK, worth £8.5 bn. If the prices are compared to the pre-pandemic level, the value of the transactions is nearly doubled.

And if we talk about numbers, currently, there are around 8.7 million rental homes in the UK – making it reach the 4th highest spot in the world, in terms of the size of the rental market.

Rental yields are constantly increasing…

Rental yields are considered a stable source of secondary income and a hedge against inflation and a way to maximise the returns. When the UK rental market is flourishing well, landlords are also eyeing at the highest yielding areas to make the most from their investment. In the first quarter of 2022, 71% of buy-to-let landlords have bought in the 50% highest yielding areas, which is up from 57% a decade ago.

It is also noticed that these landlords have bought buy-to-let properties outside the capital in 2022, which is up from less than a quarter a decade ago. Landlords have found most of the buy-to-let properties on the outskirts of London or outside London for better yield and promising capital appreciation.

Where to invest in buy-to-let properties?

Hamptons have pinpointed the 15 highest areas where the landlords have bought the highest numbers of buy-to-let properties. Out of 10 top locations, seven are located in the north of England or the Midlands.

Middlesborough has taken the top spot with 58% of properties bought by a landlord in the past six months. Calderdale in Yorkshire and the Humber and East Staffordshire in the West Midlands followed closely behind with 50% and 48% of properties bought by investors respectively.

The real estate experts at Copperstones suggest investing in Barratt Homes’ projects including Ridgeway Views, Millbrook Park and No. 10 Watkin Road, where properties can fit into your budget and are complemented with world-class facilities and amenities.

To know more about real estate investment opportunities in the UK or about Barratt Homes’ projects, feel free to contact the Copperstones’ sales representatives at +44 203 888 5555 or write your query at enquiries@copperstones.com and we will get back to you with the hand-picked list of investment properties and bespoke investment plan.