A survey by Zoopla has found that 11% of the properties listed for sale have previously been used as property rental homes for private tenants.
The government’s English Private Landlord survey published in May 2022 report that ‘individual landlords’ – those that were not companies – represent 85% of all landlords. Individual landlords owned on average between one and four properties, and 45% owned only one rental property. The survey asked landlords whether they would relet the next time one of their rental properties became vacant. Only 69% of individual landlords said they would relet the property, and those with only one property were less likely to relet than those with multiple properties.
The number of ex-rental properties available for resale has decreased since its peak in 2020, when the proportion of homes on the market was 14%. At the time, during the pandemic, many of the rental homes on the market were located in the UK’s largest cities.
The property website says the problem of increasing interest rates are just one of the reasons that landlords are selling their rental stock. Buy to let mortgage rate increases, more regulatory measures and fewer tax benefits have also contributed to landlords seeking to rationalise their property ownership.
Zoopla’s report reads: “Five years ago, around half of these homes returned to the rental market as unsold or were bought by another investor, however, this proportion has dropped to a third more recently.”
For the home buyer, a former rented house can be more attractive as it is more likely to be in need of modernising and ‘doing up’ while being more affordable. Zoopla estimates that the average home previously lived in by owner occupiers can be a quarter more expensive than a former rental property, equating to an average £190,000 for a rental property and £250,000 for a property sold by an owner occupier.
Increases in borrowing costs in the next half of the year are likely to impact the number of rental properties yet to come onto the market. Zoopla suggests that there will be a “build-up of market momentum” depending on how much interest rates will be increased for borrowers.
Estate agents Foxtons and Chestertons have reported that the current financial uncertainty has not significantly dampened the number of home buyers actively looking for property. However, in a sensitive market, it is essential that houses are sensibly priced if sellers really want to sell quickly at a time when more properties are becoming available.