Survey reveals that buy-to-let continues to deliver high yields

A new report suggests that buy-to-let investments continued to deliver high yields in Q2, despite landlords harbouring concerns over capital gains and the private rental sector.

BM Solutions research, carried out in conjunction with the BDRC Continental Landlord Panel and involving 780 landlords, revealed that the number of landlords surveyed in Q2, who said they retained confidence in their own businesses, was at 36 percent, a fall of 5 percent from the first quarter.

The same rate of decline was true of landlords having confidence in the near term future of the rental sector, with just 19 percent giving a positive response, while just 12 percent said they felt confident about the future of UK capital markets, a huge 14 percent decrease from Q1.

The report also highlighted that tenant demand reduced during the second quarter, with 19 percent of landlords seeing a fall in figures.

BM Solutions cited the situation in central London as key to this statistic, where demand has fallen by 44 percent.

BM Solutions head Phil Rickards says:

“Landlords are feeling somewhat gloomier in the second quarter and we know some are finding it difficult to adjust to the recent tax changes, which is why those with portfolios of over 11 are most likely to be looking to decrease the number of properties they own in the next year.

“This quarter the report has also highlighted declining tenant demand and a fall in intentions to raise rents. However, even against this backdrop, along with profitability remaining high, rental yields have edged up from the first quarter to 6 percent.”

86% of landlords are still enjoying buy-to-let profits

However, almost nine in ten landlords (86 per cent) confirmed that they still make profit from their rental businesses, while 31 percent are making a full-time living from property rentals.

Further positive feedback came with news that the number of landlords intending to expand their property portfolio has increased by 2 percent from the first quarter of the year to 15 per cent in Q2.

At the same time 49 percent of landlords were confident about future rental yields, a slight reduction of 2 percent on the first quarter.

Planning for future profit

Jorden Abbs, head of operations at Commercial Trust, had this to say,

“It is understandable that landlords are finding the changes in the industry difficult to interpret and are taking a more considered approach to investment.

“As with any business, strategy must flex to accommodate change. The support of experts can be invaluable in identifying solutions that can achieve ongoing profitability.

“We are working with clients daily to identify buy-to-let solutions that offer significant cost savings, whether for landlords with one or two properties, or those with sizeable portfolios.

“Taking a proactive approach is by far the best way to ensure ongoing success and we welcome any opportunity to investigate similar cost-saving opportunities for landlords across the UK.”

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.

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