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Buy-to-Let Yields have Dropped to a 3-Year Low, Reports BM Solutions
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Buy-to-let yields for landlords have dropped to a three-year low, due to the effects of recent tax changes, according to the latest quarterly landlords panel by BM Solutions, covering the fourth quarter (Q4) of 2018.
The lender found that average buy-to-let yields have fallen to 5.6% on the previous quarter.
Those with large portfolios have been worst affected, with three quarters of landlords managing between 11-19 properties reporting a decline in profitability over the past three years.
Almost a quarter of buy-to-let landlords, especially those with larger portfolios, now plan to sell up and leave the private rental sector, with the research citing tax and regulation changes as the main reasons.
Despite that, some landlords are still planning to add to their portfolios, with one in seven investors preparing to purchase more properties.
The research also found that confidence among landlords in the UK financial market in the short-term has dropped by 8% year-on-year to just 9% – the lowest level in five years.
However, despite the decrease in their confidence levels, the majority of buy-to-let yields are still healthy, with 86% of landlords saying that they still make a profit from their property portfolios.
BM Solutions found that 31% of landlords make a full-time living from their lettings businesses, while 55% use their rental income to supplement their wages.
Phil Rickards, the Head of BM Solutions, says: “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%, equalling the record high seen in Q3 2018.”
He adds: “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.”
Landlords, have your buy-to-let yields dropped over the past year?
