Despite yields rising to record highs, the lack of new investment continues. The average investor in England and Wales this year achieved a gross yield of 7.3%, up from 7% in 2023 and 6.3% in 2015. However, higher mortgage rates and limited ability to offset these payments have reduced post-tax profits for most higher-rate taxpayers.

The share of homes sold by landlords has been falling for three years, with private landlords accounting for 13% of sellers this year, down from 14% in 2023 and 16% in 2022. Despite this, landlords are still selling more properties than they are buying, reducing the number of homes available to rent.

If trends continue, an estimated 146,060 homes will be sold by private landlords in Great Britain this year, more than offsetting the 113,630 new buy-to-let purchases in 2024. This would mean private landlords have sold 328,750 more rental homes than they have bought since 2016.

Institutional investment in larger rental developments has not fully compensated for this shortfall. There were 42% fewer rental homes on the market last month compared to June 2016.

The shortage of rental homes continues to drive up rents. The average tenant paid £1,347 per month last month, 5.8% more than a year ago. Scotland saw the largest increases, with rents on newly let properties rising 11.1% year-on-year. In contrast, London saw the slowest growth, with rents increasing by 2.7% year-on-year, the weakest since October 2021.