Buy-to-let still profitable, suggests latest research

If you’ve ever wondered how much money a typical landlord makes, latest figures provide some impressive reading.

How much money do landlords make on average?

In the past 12 months, the average landlord has enjoyed total returns of more than £20,000.

The total of £21,988 takes into account income and capital, and is the highest amount recorded since November 2014. However, it does not factor in any deductions, such as property maintenance or mortgage payments.

The average capital gain contributed £13,594, while the rental income made up £8,394, according to the data collected by estate agent Your Move.

It also suggested an average gross rental yield of 4.9 per cent for January. This is based on a typical rental property in England and Wales and does not take into account factors such as void periods.

The yield is marginally down from 5 per cent recorded a year earlier.

No bull in the buy-to-let china shop

Adrian Gill, director of estate agents Reeds Rain and Your Move, said: “Landlords balance sheets are looking healthier than at any point since 2014, and property investors are looking at an excellent rate of return from their portfolios.”

His enthusiasm is not dampened by the forthcoming additional 3 per cent stamp duty charges affecting buy-to-let properties from April. However, he admitted that the reduction in tax relief, which is being phased in over four years, will affect landlords.

He explained: “Landlords are long-term investors and generally take good advice before making a new purchase, while the real changes will come when some landlords see gradual changes to their relief on mortgage interest. The rules around UK property are changing - but there is no bull in the buy-to-let china shop.”

Are rents rising in the UK?

The research also suggested that rents have been accelerating too, with annual rent rises reaching 3.6 per cent in January, up from 3.4 per cent in December. It puts the average rent at £790 a month in January this year.

The East Midlands and the East of England lead the growth in rents, up 5.9 per cent and 5.8 per cent respectively.

These are followed by London, where rents were 5.7 per cent higher in January compared with a year earlier. The slowest rent rises have been in Wales, which are up only 0.6 per cent during the past year.

Mr Gill added: “Rents are beginning to accelerate once again on an annual basis.”

And he suggested the outlook for increasing rents remained rosy for landlords, saying: “There is a huge shortage of housing in the UK, particularly compared to an accelerating population and an economy that continues to outpace neighbouring countries.

“Meanwhile, real wages continue to rise meaning many tenants are able to pay a little more rent if necessary. In a competitive market, that is a recipe for rent rises.”

Are your yields remaining steady? Could tax tinkering increase your rents? Let us know in the comments section below.

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