But investors also made up 13.4pc of vendors last year, selling 201,300 properties. This resulted in a net loss of around 17,200 homes from the buy-to-let market.
The sector has been losing more investors than it could entice since 2016, when a three percentage point stamp duty surcharge was introduced for additional properties.
Landlords narrowly avoided a similar tax rise in 2021 but further changes are thought to be on the Government’s radar. The Chancellor, Rishi Sunak, was close to increasing the surcharge to four percentage points in the most recent Budget.
The proposed tax rise was hidden in the small print of a document published by the Office for Budget Responsibility, but it was not ultimately announced.
It is thought to have merely been put on ice, rather than scrapped altogether. Experts have predicted that the surcharge could still be increased in a bid to boost first-time buyers by disincentivising landlords.
Investors will also need to address costly eco upgrades this year under rules that will require all newly let rentals to have a band C Energy Performance Certificate.
Although the deadline allows for any changes to be made by 2026, or 2028 for existing lets, Jon Cooper of Aldermore said landlords should review their EPC ratings now.
“We’re seeing a wide range of changes that may be required, which in some cases may need significant funds,” he said. “This can be anything from replacing light bulbs with high efficiency ones to more substantial and time-consuming projects such as replacing the central heating, rewiring and the installation of new boilers.”
He added: “Any changes will need to be taken into account by landlords seeking new investment properties or looking at managing current portfolios.”
The rise of build-to-rent
Another serious threat to small-scale landlords is purpose-built and professionally managed rental homes. They come with extras that smaller landlords cannot compete with, such as gyms and meeting rooms, and are spreading quickly throughout the country.
Build-to-rent is backed by large institutional investors such as pension funds. While these homes tend to be pricier, many tenants prefer the higher level of service and accommodation.
Build-to-rent was initially focused on the capital, but more than half of these lets were advertised outside London for the first time in 2021, according to Hamptons.
The company’s David Fell said: “This shift has resulted in a fall in the average rent as developers increasingly open schemes in cheaper locations outside London.”
