Shock for buy to let as income plummets by a fifth in a decade

The typical landlord’s income from property has plummeted by a fifth in under a decade according to the National Landlords’ Association.

Its latest survey of members, in the final quarter of 2019, shows an average yield of 5.4 per cent, down from 6.7 per cent in 2011. 

This fall of 19.4 per cent represents a drop in income of more than £19,000 against an average residential property portfolio, suggests the NLA.

The worst affected landlords are those with larger portfolios, 20 or more properties, who have seen typically achievable yields fall from 7.7 per cent less than a decade ago to 5.8 per cent today – a drop of almost one third.

Throughout the last decade the cost of acquiring property and managing homes has increased significantly, whilst typical monthly rents have increased below inflation over the same period. 

For instance, since 2011 average house prices have increased by 40.23per cent whilst rents have risen only 14.5 per cent.

“Although it’s popular to paint private landlords as greedy parasites, only interested in pushing rents as high as they can go, the fact that rents continue to track below inflation, and far behind house price inflation, illustrates that this is far from the case” explains Richard Lambert, NLA chief executive.

“Being a landlord in the UK remains a worthwhile, and potentially profitable endeavour, but it is not a means of turning a quick profit. Anyone planning for future investments should think very carefully about their options and maintain realistic expectations of a reasonable return. A long-term strategy is essential, as is a commitment to providing a high quality service.”