Landlords in the near future will not be the dying breed some industry commentators would have agents believe, research by a leading lender has revealed.
Chatham-based KentReliance says its data shows landlords in the UK will make an average net profit of £162,000 per property over the next 25 years – in today’s money – despite the government’s recent tax take.
This equates to £6,500 per property per year and includes both rental income and capital gains.
KentReliance says the figures prove buy-to-let investment still has long-term appeal for landlords, even though over the 25-year term they will pay £100,000 in tax. That includes £60,000 in capital gains tax, £29,000 in income tax and £10,000 of stamp duty, assuming the landlord is a lower rate tax payer.
“The buy to let market is undergoing a sea change,” says John Eastgate of KentReliance’s parent company, OneSavings Bank (pictured, below).
“Regulatory and taxation changes have altered the market dynamic, reducing its attractiveness to amateur landlords, and increasing the tax bills of higher-rate investors.
“In spite of rising costs, there are still healthy returns to be found in property for committed investors, but the days of speculation are gone.
“It is a long-term business endeavour, requiring commitment and expertise.”
His company’s research also reveals that London will remain the most profitable market for landlords, followed by the South East, the East of England, Scotland and the South West.
“Policy change remains a threat, however it is essential that the role of professional landlords in providing vital housing stock is not undermined,” says Eastgate.
“Without them, the supply of housing in the sector would naturally shrink, leading to higher rents for a growing number of tenants competing for accommodation.”