Busiest housing market in four years as landlords sell up

The housing market is the busiest it has been for four years, in part because landlords have been trying to sell up ahead of this week’s budget, especially in London.
Almost a third of properties in some parts of the capital that are currently listed for sale are former rentals, according to data from Zoopla, the property search website.
For example, 32 per cent of all homes up for sale in WC postcodes, which include Westminster, Islington and Camden, have been rented out within the past four years. In EC postcodes, which include popular renting areas such as Angel, Clerkenwell and Shoreditch, 27 per cent of properties for sale are ex-rentals.
Across the country as a whole, 12 per cent of all homes currently up for sale have been rented out for at least some of the time since 2020.
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Zoopla’s data shows that there has been a “steady flow” of landlords exiting the rental market since 2016. Tax and regulatory changes, coupled with higher mortgage rates, have made buy-to-let investments less lucrative. There remains a fear among some landlords that they could be targeted again in this week’s budget.
Zoopla estimates that about 7 per cent of all house purchases this year will be by landlords with mortgages, which compares to about 10 per cent last year and almost 15 per cent in the run up to the financial crisis in 2008.
“Buy-to-let activity has notably declined as smaller or accidental landlords exit the market, influenced by less favourable financial conditions and increasing regulation,” Chris McLaughlin, director at Ocean Estate Agents in Bristol, said.
“Consequently, much of the new housing stock now comprises former rental properties. Additionally, 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.”
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However, the departure of landlords from the market has opened up an opportunity for first-time buyers to get on the housing ladder. The average asking price for a previously rented home is £307,000 — 16 per cent lower than the average UK asking price of £365,000.
First-time buyers are on track to account for 36 per cent of all purchases this year, making them the most active cohort in the market.
The rapid growth in rents, which continue to hit new highs almost every month, and the decline in mortgage rates in 2024 have “shifted the renting versus buying dynamics”, Richard Donnell, executive director at Zoopla, said.
He has calculated that the average mortgage repayment for a typical first-time buyer is now 17 per cent cheaper than renting, compared to a difference of only 2 per cent this time last year.
The increasing number of first-time buyers, coupled with landlords exiting the market, means that activity in the housing market is at its highest level since the post-lockdown boom in 2020.
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Zoopla estimates that sales are currently going through on 306,000 homes in the UK, worth about £113 billion, which is 30 per cent higher than at this point in 2023 and the highest in four years.
Donnell said the “large supply of homes for sale” was keeping house price inflation in check, with average asking prices up just 1 per cent over the past 12 months.