This is according to the latest Hamptons Monthly Lettings Index, which also revealed that the drop across the UK means investors are set to sell 139,820 buy-to-lets across Great Britain in 2023, 53k fewer than in 2022 and 62k less than in 2021 when landlord sales peaked.

By the end of this year, private landlords will have sold 294,300 more homes than they’ve bought since 2016. This is more than the total number of homes in Manchester (237k) and Cornwall (288k).

The index also indicated that annual rental growth remained at 11.7% across Great Britain in October, led by double-digit hikes in London and Scotland.

Investors have made up a record 12% of all sellers in Scotland so far in 2023, up from 10% in 2022. Tighter rules and regulations, predominantly in the form of rent caps, have seen landlord purchases fall to a record low too. Landlords bought just 6% of all homes sold in Scotland so far this year, the lowest proportion in Great Britain. It’s also where the gap between landlord sales and new purchases is widest.

Meanwhile the North East, the highest-yielding region in the country, saw the pace of landlord sales slow the most this year. Here, higher average returns offer landlords more scope to cover their rising costs. Landlords accounted for 22% of all sellers in the region this year, down from a peak of 31% in 2022. However, given that 27% of homes in the North East were purchased by a landlord this year, landlords are still buying more homes than they’re selling - the North East and North West are the only regions where this is the case.

In London, the lowest-yielding region in the country and where mortgaged landlords are likely to be hardest hit by higher rates, new purchases have slipped. Landlords bought 9% of homes sold in the capital this year down from a peak of 20% in 2015. The share of homes sold by London investors has also declined from 19% in 2022 to 15% so far this year. Consequently, the number of homes available to rent in the capital so far this year has halved relative to 2015 levels.

Aneisha Beveridge, head of research at Hamptons, said: “There’s a strong argument that landlords have been hit harder by higher rates than anyone else. However, despite these challenges, most landlords are sticking it out.
Strong rental growth is softening the blow, but they’re also drawing on their equity and cash reserves to see them through. Portfolio investors - who tend to be more highly leveraged - are juggling their assets by selling one or two properties to reduce their mortgage debt on the rest of their portfolio, rather than selling up entirely.

“Most landlords cashing in are one of the 10%-20% of mortgaged investors who face making losses when remortgaging at higher rates. Typically, they bought low- yielding properties in the South of England relatively recently or they’ve been aggressively maximising their leverage and extracting equity to grow their portfolio.

“The real supply issue facing the private rented sector hasn’t just been caused by landlords selling up, but also because there’s been little appetite among investors to purchase new buy-to-lets over the last few years. This has reduced the number of homes available to rent which is fuelling rental growth. After adding wider inflationary pressures on top, we think rents will have risen by 25% by the end of 2026.”