The number of buy-to-let properties in London being put up for sale is skyrocketing, according to new research from TwentyCi.

In July 2024, 22% of homes listed for sale in inner London were previously rented out. This is a record high and almost three times higher than the average across the UK.

The trend has been accelerating for years. The proportion of landlords selling up in London has jumped from 12.9% in 2019 to 15.6% in 2023 and now to 22% in 2024.

Why Are Landlords Leaving?

Several factors are driving this exodus. The profits from buy-to-let are shrinking, as the rapid house price growth of recent years has slowed and mortgage costs have risen.

Changes in government policy are also adding pressure. Tax breaks for landlords have been reduced, and new regulations are on the horizon, including a requirement for rented properties to meet a minimum energy efficiency standard by 2030.

The Labour government’s proposed rental reforms are also causing uncertainty. These include stronger protections for tenants against unreasonable rent increases and the scrapping of “no-fault” evictions, which could make it harder for landlords to manage their properties.

A Rental Market in Crisis?

The dwindling number of rental properties is making it harder than ever for people to find a home. Zoopla reports that letting agents have a third fewer properties available to rent than they did before the pandemic.

This shortage is pushing up rental costs. While rental growth has slowed slightly in recent months, rents are still significantly higher than they were before the pandemic.

In some areas, particularly around major cities, rents are actually rising faster than ever. For example, rents in Rochdale have increased by 6.9% in the first half of 2024.

What Does This Mean For You?

If you’re considering investing in the buy-to-let market, this is a challenging environment. But it also presents an opportunity. As more landlords leave, the demand for rental properties will continue to grow, potentially leading to higher rents and strong returns for those who stay in the game.

However, you need to be prepared for a more complex and regulated market. Before you buy, make sure you understand the latest rules and regulations for landlords, and factor in the potential impact of future policy changes.