Accidental landlords added 80,000 homes to the buy to let sector in 2017, as more homeowners prefer to rent their properties as opposed to waiting for them to sell.
New research from Countrywide plc Monthly Lettings Index has revealed that accidental landlords remain in the buy to let sector for a shorter period of time than their traditional counterparts. The average landlord or investor owns their rental property for 17 years, while in contrast the accidental landlord typically lets their property for a mere 15 months.
89 per cent of accidental landlords opt to put their properties back up for sale after their first tenant moves out as opposed to seeking a new tenant. Of the 80,000 homes that came onto the rental market in 2017, 8.2 per cent have been up for sale in the past six months. This is the third consecutive year that this percentage has grown.
Research director at Countrywide, Johnny Morris, said: ‘While most landlords are in the business by choice, the last three years have seen an increase in the numbers letting out a property they had previously tried to sell. With mortgage rates remaining low, these discretional sellers can afford to let their home, while they wait and see what the future holds for the sales market.’
The main location for accidental landlords is in London, with 12.5 per cent of homes that had previously been up for sale entering the rental market. This is the highest figure since Countrywide’s records began in 2007, surpassing 2010’s previous peak of 12.1 per cent. Stronger sales markets outside the capital limit the chances for landlords to accidentally enter the market.
The annual rate of rental growth was also up in November, with the cost of a new let rising 1.2 per cent over the last 12 months or 1.6 per cent outside London. The nationwide pickup has been propelled by London’s market finally achieving positive growth.
Morris continued: ‘Rental growth in London is once again positive. Every region of Great Britain now has average rents higher than a year ago. And it likely that relatively low numbers of rental homes coming onto the market will keep rental growth firmly in positive territory. But growth remains well below the long run average, with November 2017 three per cent.’