The latest figures released by Hamptons have shown that during 2020 131,900 properties were sold by landlords in Britain, the fewest since 2013. A pause in the housing market during the first lockdown, which suppressed overall transactions, combined with an eviction ban throughout the remainder of 2020, limited the opportunity for landlords to sell up.
According to Hamptons, the average price was £82,450 above the typical purchase price - a profit of 42% having owned the property for 9.1 years on average.
Over the last few years, the average capital gain made by a landlord has been shrinking. However, despite the pandemic, stronger house price growth seems to have reversed this trend. The average landlord gross gain increased by £3,390 or 4% to £82k compared to 2019 (£79,060), marking the first annual rise in more than five years.
As you would expect, landlords in London made the biggest gains.
In the capital, the average landlord sold their buy-to-let for £302,200 or 71% more than they originally paid for it, having owned the property for 9.8 years on average. 2020 reversed the fall in a London landlord’s gross profit. Despite the increase, typically landlords who sold in the capital last year made a smaller gross profit than those who sold in 2016 when they made an average gain of £364,960. 2016 marked the high point for landlord profit when many investors, having bought at the bottom of the market following the 2008 financial crash, decided to sell up.
Landlords in the North East continued to make the smallest gains. The average landlord who sold up in the North East made £11,310 or 16 per cent capital gain having owned for 8.0 years. 36% of investors in the region sold their buy to let at a loss, compared to just 12% in England & Wales overall.
Landlords who have been in the game for the longest period of time have reaped the largest rewards.
The average landlord who owned their buy-to-let for more than 15 years made more than three times more than a landlord who had owned their property for less than five years. Many of whom would have renovated and invested further in their property to add value.
