The proportion of purchases to landlords dropped to 9.6% in January 2025, underlying how the market is becoming less attractive to investors.
This is the first time the proportion has fallen below 10% since records began in 2009, and comes after the stamp duty surcharge was increased from 3% to 5% in the Autumn Budget.
Landlords are also braced for the Renters’ Rights Bill, which is set to increase tenant protections and outlaw ‘no-fault’ Section 21 evictions.
Aneisha Beveridge, head of research at Hamptons, said: “New purchases by landlords have been depressed by increases in stamp duty rates towards the end of last year and the prospect of tighter regulation in the form of the Renters’ Rights Bill.
“While purchases by landlords haven’t completely dried up, it’s looking like higher stamp duty rates have reduced the share of homes sold to landlords by between 10% and 20%.”
Rental growth for new lets has cooled, with an average increase of 1.8% in January year-on-year.
However, tenants renewing their contracts have seen rents rise by 6.0% over the last 12 months, as they play catch-up with open market levels.
Beveridge added: “The pace of rental growth nationally has likely bottomed out. There are some signs that growth outside London is slowly picking up again, but we’re unlikely to see it run at the same rate as it has over the last few years.
“Rather, a squeeze in the number of rental homes on the market has made securing a property more competitive than it has been in recent months.
“What happens to rents on newly let homes tends to play out in the renewal market around 18 months later. So we expect tenants renewing their contracts to face smaller increases in 2025 than they did in 2024.
“Over the past five years, the lag between the two markets has saved sitting tenants an average of £6,641 each year, a saving which would have been wiped out had increases in renewal rents tightly tracked new lets.”