The UK property market is undergoing significant shifts, particularly for long-term landlords who have enjoyed a steady rise in property values since the 1980s and 1990s. Over 160,000 rental properties have exited the market as more landlords are selling than buying. Why is this happening? And could this be the perfect time to invest in UK property?

Why Are Landlords Exiting the Market?

There are a few major reasons why seasoned landlords are selling off their properties:

1. Legislation and Compliance: The increasing legal requirements and the complexities of compliance have made being a landlord more of a hassle. These include more tenant protections, stricter regulations, and rising property maintenance costs.
2. Mortgage Rate Increases: The final straw for many landlords was the significant rise in mortgage rates to around 5%. Faced with these higher costs, many landlords realised that earning 4-5% on savings in the bank seemed more appealing than the hassle of dealing with property-related headaches.
3. Retirement: Many landlords who have benefited from decades of property value growth are reaching an age where they want to retire. Selling their properties seems like the right decision for them after a long, profitable run.

Is This the Best Time to Invest in UK Property?

Despite these challenges, some see this as the ideal moment to enter the property market. While many landlords are cashing out, serious investors, especially wealthy individuals, are eyeing the UK property market as an opportunity for long-term growth.

A recent survey by Investec Wealth & Investment found that 70% of wealthy clients are planning to invest in UK property. These investors view the current market conditions—such as softening property prices and reduced competition—as an entry point for potentially lucrative deals.

The Rise of a New Generation of Property Investors

Interestingly, there is a growing wave of younger property investors. These individuals, typically in their 40s, have generated wealth over the last decade and are entering the property market for the first time. They see property investment as a way to build long-term wealth, undeterred by the challenges that have caused some long-time landlords to exit.

This new demographic brings a fresh perspective. Unlike seasoned landlords who may be tired of compliance and cost pressures, these new investors are more willing to tackle the complexities, understanding that property values, especially in a stable market like the UK, tend to appreciate over time.

Property Prices and Deals in the Current Market

Property prices in the UK have either fallen slightly or remained flat over the last couple of years, creating potential buying opportunities. Long-term landlords are keen to sell, creating a soft market where savvy investors can find good deals.

For example, properties that may have offered a 10% discount before might now be available at even steeper discounts, particularly from sellers eager to retire or avoid upcoming capital gains tax changes. Smart investors, undeterred by short-term fluctuations, are positioning themselves to capitalise on these opportunities.

Long-Term Prospects and Why the Wealthy Are Betting Big

For those with a long-term view, the UK property market remains a solid bet. Even with recent challenges, the long-term trend of property values increasing remains intact. The UK has an established legal system, stable political environment, and consistent demand for housing. Wealthy investors are acutely aware of these factors and are using them to their advantage, betting that property will continue to be a strong long-term investment.

One key advantage of investing now is the lack of competition. As many landlords exit, prices are relatively low, and the rental market is strong. Rents have increased by 20% in some areas due to a shortage of available properties, driven in part by higher mortgage rates. For those who buy at today’s prices, the expectation is that mortgage rates will come down, rents will continue to rise, and property values will appreciate, making it a potentially profitable investment.

Conclusion: Should You Invest or Sell?

For long-term landlords looking to retire, now may be the right time to sell and enjoy the fruits of their investment. But for those looking to enter the property market or expand their portfolios, this could be one of the best opportunities in the last decade.

If you’re interested in learning more about property investment, feel free to explore our resources or book a consultation. The UK property market remains full of potential, and with the right approach, it can still be a fantastic vehicle for long-term wealth creation.