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
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
Despite that, some landlords are still planning to add to
their portfolios, with one in seven investors preparing to purchase more
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.
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
have your buy-to-let yields dropped over the past year?