Will Rising Rents Tempt More Property Investors to Buy UK Property?

Hundreds of thousands of investors have long turned to residential property as a means of income, supported by low mortgage borrowing rates, solid demand from tenants, and stable yields, as buy-to-let consolidated itself as the investment of choice.

Even despite a challenging few years for the buy-to-let market, characterised by tax and regulatory changes, investment in buy-to-let has continued to outperform most major asset classes, as Britain’s rented sector continues to expand, with a sixth of the population now living in accommodation rented from private landlords.

But research shows that interest from new investors in the buy-to-let market has fallen of late.

Housing minister Felicity Buchan wrote to MPs last week expressing concern at the chronic shortage of homes to rent in the private rented sector amid an ever-widening supply-demand imbalance in the market.

Following her appearance before the Levelling Up, Housing and Communities Committee last month, she wrote to MPs explaining that there were 260,000 fewer households in 2020/21 compared to the high point in 2016/17, according to the English Housing Survey. But will rising rents tempt landlords to invest in buy-to-let?

New research released today shows that landlords will buy a slightly higher proportion of homes in 2022 than they did in 2021.

So far this year 12.2% of homes were bought by an investor in Great Britain, the highest level since 2016 and up marginally from the 11.7% recorded during 2021. However, purchases remain below their 15.5% peak in 2015, the year before the 3% stamp duty surcharge was introduced.

Despite the proportion rising between 2021 and 2022 however, fewer sales overall mean the absolute number of investor purchases will be down by around 30,000 on last year.

The recent reassurance of landlords who had previously been priced out of a heated market has meant the numbers registering in a branch are up 9% on last year despite an overall fall in buyer demand.

Earlier in the year, many landlords struggled to make deals stack up while paying record prices and facing stiff competition from other buyers.  Instead, they chose to sit back and wait. The proportion of investors paying over the asking price remained above 40% throughout 2021, before peaking at 48% in April 2022 (alongside the wider market).

However, over the last few months, some landlords have re-emerged, turning their attention to homes that have been lingering on the market.  In November 37% of offers by landlords were on homes without any competing offers, up from just 14% in January (chart 2).  A less competitive market means that in November just 25% of investor purchases were agreed above the asking price, compared to 30% among first-time buyers.

It is a similar story when it comes to time on the market, with the average investor purchasing a home that had been on the market for 54 days in November, up from just 33 days in November last year.  By comparison, homes bought by first-time buyers last month had been marketed for an average of 40 days, while homes bought by movers (people selling their homes to buy another) had been advertised for 50 days.

Landlords’ slow re-emergence has been underpinned by investment in places towards the top of the yield league table.  So far this year 56% of new investor purchases have been in places with average yields of 6% and above, a figure which has risen from 40% a decade ago.  Meanwhile, 85% of homes sold by investors this year were generating a yield of sub 6%.

Hartlepool offered new investors the highest average gross yield (9.9%) in England and Wales for the second year running (table 1).  All the top 10 yielding locations were based in Northern England or Wales, with North East Lincolnshire (8.2%) the highest yielding location across the South and Midlands at number 17.

Portsmouth is the highest-ranked local authority anywhere in the South of the country, coming in at number 91 with average gross yields of 6.4%. Meanwhile, Bexley is the highest-yielding London Borough, but with an average gross yield of 5.9%, the area sits in 139th place across the country.

Table 1 – Top 10 yields across England & Wales


Average 2022 gross yield

2021 rank




County Durham






Blaenau Gwent






South Tyneside






Redcar and Cleveland



Neath Port Talbot






Source: Hamptons & Land Registry

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