Most Landlords Turned a Profit Last Year Despite Regulatory Changes

31 per cent of landlords make a full time living from their property portfolio, while 55 per cent use this income to supplement their earnings, according to the latest quarterly landlords panel report from mortgage firm BM Solutions.

88 per cent of landlords did, in fact, make a profit from their letting business in 2018. Despite this, however, 55 per cent of landlords believe their profitability has been affected by regulatory changes.

When asked if they planned to sell at least one property in 2019, 23 per cent of landlords answered yes, with those with larger portfolios of 11 to 19 properties being twice as likely to give this answer. Just 15 per cent intend to add to their portfolio, however, according to the recent data.

Rental yields

In terms of rental yields, the average in the UK has dropped to 5.6 per cent, which is a three-year low, according to the report that covers the fourth quarter of 2018.

Yields in outer London, Yorkshire and the Humber, and the North East stood at 6 per cent, with London the worst at 4.7 per cent.

The East of England saw the biggest fall in demand, which was down 18 per cent, followed by a 12 per cent fall in the South East and an 11 per cent fall in central London.

Market outlook

Confidence in the UK financial market has dropped by 8 per cent year on year to just 9 per cent, which is down from 17 per cent in the fourth quarter of 2017, according to the recent results from BM Solutions’ quarterly landlords panel report.

Confidence in capital gains also dropped with an 8 per cent fall year on the year. Landlords were more positive when asked about rental yields, however, where confidence grew 2 per cent. Also when asked about the private rented sector, confidence went up 1 per cent year on year, according to the recent data from BM Solutions.

Phil Rickards, BM Solutions head, said: “The buy to let industry has been through many regulatory changes over the past few years, and the effects of this are clearly being felt, however, the landscape is not entirely bleak.

“The proportion of landlords making a profit from their lettings activity remains at 88 per cent, equalling the record high seen in quarter three 2018. It is clear that the market is sensitive to the current legislative and macro-economic environment and this has been reflected in the latest findings.”