Landlords spent £12.1bn on buy-to-let in the first half of 2018, 30% or £5.2bn less than in the first half of 2015.
The Hamptons International Monthly Lettings Index found that landlords purchased 64,260 homes in the first half of 2018, 31% fewer than during the same period three years before.
In London 61% purchased buy-to-lets outside the capital, up from 25% in 2012.
Aneisha Beveridge, head of research at Hamptons International, said: “The total value of homes purchased by landlords has fallen by over £5bn in just three years.
“This is due to landlords buying fewer buy-to-lets and investors spending less on the homes they do buy.”
The average price of a home bought by a landlord fell by 4% to £174,580 in the first half of this year compared to the corresponding period last year.
Rental growth has accelerated however, as the average rent on a new let rose to £980 per month in September, up 1.6% year-on-year.