Landlords are operating a “buy and hold” strategy with even areas with strong rental growth suffering from a dip in transactions, a proptech platform claims.
Online buy-to-let mortgage platform LendInvest’s second quarter Buy-to-let Index – which uses rental and house price data on Zoopla and transaction figures from the Land Registry – found that sales to landlords have slipped annually in all 105 postcodes it analyses.
This was despite annual rental growth being as high as 5.28% in areas such as Romford, Essex, and capital gains in Luton hitting 7.29% year-on-year.
The provider said its own data suggested landlords were focusing on remortgaging rather than adding to their portfolio with new buy-to-let mortgages.
However, LendInvest said many landlords will now be at the end of two-year fixed rate deals they took out ahead of the introduction of the extra Stamp Duty charge in April 2016, so are likely to be weighing up their options – which could boost transactions.
Ian Boden, sales director at LendInvest, said: “It’d be so easy to look at the underlying data that tells us transaction volumes are down and make dire predictions about the health and wealth of the rental market.
“Instead, what our index proves once again is that looking at one metric in the housing market is never enough. One metric on its own can’t clearly define the performance of a city’s property market.
“Each of the very top performing buy-to-let locations this quarter is experiencing a slowdown in transactions – substantial falls in places, dips in others.
“But the best places this quarter continue to outperform the competition well thanks to strong performances on other equally important metrics like rental yield, capital gains and rental price growth.
“Data from the index, UK Finance and our own experience as a mortgage lender strongly suggests that right now a ‘buy, hold and remortgage’ strategy is some investors’ preference while the market works through a possible slowdown.”
Top 10 buy-to-let postcodes
| Yield | Capital gains | Rental price growth | Transaction volume | |
| Luton | 3.91% | 7.29% | 3.70% | -6.15% |
| Colchester | 3.63% | 6.33% | 4.77% | -6.73% |
| Romford | 4.09% | 4.99% | 5.28% | -7.84% |
| Birmingham | 4.55% | 5.00% | 3.66% | -6.46% |
| Manchester | 5.36% | 4.38% | 3.71% | -7.35% |
| Cambridge | 3.26% | 4.57% | 4.76% | -6.63% |
| Northampton | 3.99% | 6.59% | 2.17% | -7.36% |
| Bristol | 3.83% | 5.51% | 2.75% | -6.20% |
| Ipswich | 3.42% | 5.77% | 2.76% | -6.16% |
| Southend-on-Sea | 3.62% | 6.05% | 2.53% | -6.93% |
Source: Property Industry Eye