Saturday, February 24, 2024

London buy-to-let landlords saw largest yields in the UK

UK landlords

UK landlords who sold their properties in 2018 made an average of £79,770, according to the Hamptons International Monthly Lettings Index

Landlords in the U.K. who sold their buy-to-let properties in 2018 made an average of £79,770 (US$103,692), according to the Hamptons International Monthly Lettings Index, which was released on Monday.

London landlords saw an even bigger yield, with pre-tax gains of £248,120, the report stated.

Over the 9.6 years that the average landlord has owned their buy-to-let, house price growth has driven their gains, with prices having risen around 30% over the period, according to Aneisha Beveridge, head of research at Hamptons International, an agency operating in London and the southern areas of U.K.

Profits are shrinking, however. The average gross gain in 2018 is down 4.4% from the same time the previous year, when landlords around the country saw a profit of £83,430, the index stated. Those in London who sold in 2017 made an average of £24,000 more than sellers in 2018.

Landlords selling in the London neighborhoods of Kensington and Chelsea saw the largest gains, seeing a pre-tax profit of just over £1 million, on average, after 10.6 years. South Bucks, to the west of the capital, had an average gain of £278,310, the highest outside London, according to the report.

Landlords in the northeast saw the smallest average gain in 2018. Pre-tax profit was an average of £11,810 in the region, a drop of £4,270 year-over-year.

Most landlords are seeing gains, however, with 85% of all landlords selling their buy-to-let in 2018 for more than they paid for, according to the index. But many in the U.K. are looking to other investing opportunities.

Given lower expected future house price growth and tighter mortgage regulation, more investors are shifting their focus from capital gains to yields, Beveridge said in the report.

Rents ticked up across the U.K in 2018, with the average cost of a new rental now averaging £972 per month, according to the report.

Beveridge said rental growth accelerated to 2.1% in Great Britain last month, the highest level since January 2018. This was driven by a 3.9% year-on-year increase in London rents.

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