Ex-rental homes for sale hits record high as BTL landlords flee the market

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New data published today by Rightmove suggests the number of ex-rented properties up for sale is now at its highest ever level.

The real estate portal points to the autumn statement on October 30 as one potential driver for price increases, as it is believed to include an increase in capital gains tax that could affect landlords.

Nearly a fifth (18%) of homes currently for sale were previously on the rental market, up from 8% at the same time in 2010.

This trend is most pronounced in London, where almost a third (29%) of homes for sale were previously on the rental market, Scotland comes second (19%) and the North East comes third (19%).

However, this trend has been slowly increasing in recent months, with the past five-year average of 14% of homes moving from the rental to the sales market, suggesting that despite the recent surge, there is an upward trend rather than a sudden mass exodus of landlords.

The total number of new properties on the market for sale is up 14% over 2023, due to a surge in new seller activity following the Bank Rate cut. Certainty from the new government, followed by the first Bank Rate cut in four years, has seen increased activity from both buyers and sellers.

This data compares with a much quieter period in 2023, when homebuyers were hit by high inflation and peak mortgage rates. Compared to 2019, before the pandemic, the number of homes for sale is down 3%, indicating there is still no glut of homes for sale.

Rightmove has suggested there needs to be more incentives for landlords to stay in the private rented sector rather than withdraw from it and continue to invest in homes for tenants.

Rightmove’s rental market tracker frequently reports on the impact of low supply and high demand rental markets on rising rents for renters, and more homes leaving the rental sector could put further pressure on supply and costs.

Tim Bannister, from Rightmove, said: “In recent years, rising costs, taxes and legislation have made it more attractive for some landlords to exit the rented sector rather than continue to invest in it. For the private rented sector to remain healthy, it needs landlord investment to provide tenants with good housing options. We have seen in recent years how an imbalance between demand and supply can lead to rising rents, so there is a concern that if landlords do not encourage people to stay in the rented sector rather than leave, it will be tenants who pay the price.”

“However, despite the trend of more landlords opting to sell, there does not appear to be a mass exodus and we will need to monitor the longer term impact of what happens to rental properties that are put up for sale. For example, these homes could offer more choice to first-time homebuyers. It is also possible that other landlords will buy and return to the rental market. This would mark a generational shift rather than a complete exit for landlords. In any case, we hope that the Government is considering ways to support landlords and the private rented sector ahead of the Autumn Statement.”

Chris Norris, policy director at the National Residential Landlords Association, commented: “Today’s data will be of real concern to all renters struggling to find a place to call home. With demand already significantly outstripping supply, Rightmove suggests the situation is set to get even worse.”

“Every time a rental property is sold, it only exacerbates the imbalance between supply and demand. Some of these properties will inevitably end up on the homeowner market, but that’s of little comfort to households struggling to afford quality housing.”

“What we need is a housing strategy that recognises the need for more growth in all kinds of properties, including high-quality homes for private rent. That’s why the Budget must announce a pro-growth tax plan to meet the needs of renters across the country.”

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