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Landlords could earn £162,000 over 25 years – for each property they own

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Landlords could earn £162,000 over 25 years – for each property they own
Mollie Millman

Mollie Millman

15 May 2018

Landlords have received an unexpected boost as new research revealed their profits could reach more than £6,000 a year – for each property.

The figures suggested that the almost £6,500 profit a year would add up to a total of £162,000 per property over the next 25 years.

Calculating landlord profits

Some may scoff at the figures, claiming that running costs and the ever-increasing tax burden placed on landlords will eat into that figure, but all of that was taken into account. The number includes the cost of remortaging every five years, along with buying and selling costs, running costs, and taxes.

It means a typical British investor took out a typical deposit of £73,908 and may expect to receive a total rental income of £369,495 over the course of 25 years.

Allowing for total capital gains of £269,464 and total costs of £373,309, the profit would be £265,650 – the equivalent of £161,922 in today’s money, according to the research by Kent Reliance, part of OneSavings Bank.

Landlords profit across the country

The research went on to reveal large variations across the country. Few will be surprised to find out that London was the best performing region, where total profit over 25 years is expected to reach £307,887 in today’s money.

The South East is also expected to perform particularly well, with East Anglia, Scotland and the South West taking third to fifth place respectively.

By contrast, the worst performing area is expected to be the North East, where the total profit during the same period is expected to reach only £70,709.

Healthy returns in the buy-to-let market

John Eastgate, sales and marketing director at OneSavings Bank, said: “The buy-to-let market is undergoing a sea change. Regulatory and taxation changes have altered the market dynamic, reducing its attractiveness to amateur landlords, and increasing the tax bills of higher-rate investors. But in spite of rising costs, there are still healthy returns to be found in property for committed investors.

“The days of speculation are gone. It is a long-term business endeavour, requiring commitment and expertise. Investors must be prepared to undertake business and tax planning, understand the risks as well as the rewards, and, most importantly, the responsibilities they have towards their tenants.

“Policy change remains a threat, however, it is essential that the role of professional landlords in providing vital housing stock is not undermined. Without them, the supply of housing in the sector would naturally shrink, leading to higher rents for a growing number of tenants competing for accommodation.”

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