The UK housing market is experiencing its highest level of activity in four years, partly driven by landlords offloading properties ahead of this week’s budget, especially in London.
Data from Zoopla reveals that nearly a third of properties for sale in certain parts of the capital are former rentals.
In areas such as Westminster, Islington, and Camden (WC postcodes), 32% of homes currently listed were previously rented, while in EC postcodes, covering popular locations like Angel, Clerkenwell, and Shoreditch, the figure stands at 27%. Nationwide, 12% of properties on the market have been rented at some point since 2020.
Zoopla’s data indicates a “steady flow” of landlords exiting the rental sector since 2016, spurred by tax and regulatory changes that, alongside rising mortgage rates, have made buy-to-let investments less attractive. Many landlords fear additional measures in the forthcoming budget, prompting them to sell up.
This year, Zoopla estimates that just 7% of home purchases will be made by landlords with mortgages, down from 10% last year and significantly lower than the nearly 15% seen before the 2008 financial crisis. Chris McLaughlin, director at Ocean Estate Agents in Bristol, commented: “Buy-to-let activity has notably declined as smaller or accidental landlords exit the market, influenced by less favourable financial conditions and increasing regulation.”
He added that this trend has led to an increase in the supply of former rental properties on the market. “Transaction completions have risen in the last couple of months, particularly within the investment property sector, as sellers seek to conclude deals ahead of potential changes anticipated in the upcoming budget,” McLaughlin said.
While the exit of landlords has impacted the rental market, it has created opportunities for first-time buyers. The average asking price for a previously rented home is £307,000 — 16% lower than the UK’s average asking price of £365,000. This affordability has encouraged more first-time buyers, who are on track to account for 36% of all property purchases this year, making them the most active group in the market.
The shift from renting to buying has been driven by changes in mortgage and rental costs. According to Richard Donnell, executive director at Zoopla, “The rapid growth in rents, coupled with a decline in mortgage rates in 2024, has shifted the renting versus buying dynamics.” He noted that the average mortgage repayment for a typical first-time buyer is now 17% cheaper than renting, a significant change from the mere 2% difference seen last year.
The combination of increasing first-time buyer activity and landlords leaving the market has resulted in the busiest housing market since the post-lockdown surge in 2020. Zoopla estimates that around 306,000 homes are currently in the process of being sold across the UK, with a total value of approximately £113 billion. This represents a 30% increase compared to the same period in 2023, making it the highest level of activity in four years.
Donnell added that the “large supply of homes for sale” is helping to moderate house price inflation, with average asking prices rising by just 1% over the past year. As the budget looms, all eyes are on the potential policy changes that could further impact the dynamics of the UK property market.
