The Times recently calculated that recent tax and regulation changes made it unviable for many landlords to continue in the sector.

We reported this on Landlord Today and you can see that story here.

Now a high profile letting agent – Marc von Grundherr, director at London agency Benham and Reeves and himself a landlord – has written a counter argument.

This is what he says: 

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In recent years UK landlords have been bashed by government policy. They have been seen as ‘fair game’ in a political war that seeks to attract tenants as voters at the expense of those investing in the private rental sector.

There is a certain irony to this approach given that around 1.1m tenants in the private rental sector receive some sort of housing benefit and therefore those landlords that own these properties are, in effect, providing an element of social housing that government has not.

In a flurry of kicks and punches, various Chancellors have removed tax relief, increased capital gains tax, added stamp duty costs, granted amnesty to non-paying tenants during covid, clogged up the court system to the detriment of repossessions and then sought, now unsuccessfully, to prevent landlords from taking possession of their properties at all by way of the failed Renter Reform Act. This plus the hike in interest rates that has led to buy-to-let mortgage costs being significantly higher than for a number of years. 

Property investors have every right to feel downtrodden.

But, being a landlord is still lucrative in spite of Whitehall’s attempts to dampen the sector.

Let’s look at some facts that might persuade you that the rocks thrown at you of late were worth enduring. 

– Not every landlord has a mortgage, in fact more tha. A third (38%) do not.  Therefore increased interest rates affect some.

– Interest rates at 5.25% Bank base are not high by historic standards. The average rate over the last 100 years is – 5.25%. The majority of landlords are old enough to know this and so current borrowing rates are more ‘normal’ than ‘high’.

– House prices have increased by 54% in the past decade and by 152% since 2000. That’s +6% per annum in the latter case, a more than decent return. PS: Inflation has run at an estimated average of 4.4% for the past 5 years, and so property outperforms it. 

– Rents are up 31% since 2014, an annual increase of 3%. Tenant demand is higher than ever.

– The number of new homes built are lagging way behind demand. The annual deficit is around 100,000 homes resulting in a ‘product’ that is at its most scarce in relative terms than ever before.

– Alan Sugar, Donald Trump, the Duke of Westminster, Ellen DeGeneres, Jeremy Renner, Arnold Schwazernegger, Robbie Fowler… famous names that have all made their fortunes through property, not just the business that they are better known for. 

Capital appreciation, higher rents, lack of supply and heavy demand from a population that is growing by around 1m people each year. These are all huge positives.

But the real gravy for landlords is that their rental yields are far higher than the statistics show. Why? Because traditional analysis looks at yield as ‘the annual rent vs the value of the property today’ whereas many, many landlords have owned and held their portfolios for years and therefore today’s higher rents as a percentage of the original purchase price show ACTUAL yields at a far higher level. Fact: Most landlords have been such for 10 years or more – and so a 5% annual yield today is actually 7% if the property has been owned since 2014 as most have. 

Reasons to be cheerful? Against a backdrop of negativity in the sector, I rather think so.