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Why It No Longer Pays To Be A Landlord

New figures released by Savills, and published by The Times, show exactly why it no longer makes sense to be a landlord.

The newspaper, using data prepared for it by the high-end agency, compares buy to let profitability a decade ago, with the situation today.

It says: “The average sold price for a buy to let property was £161,404 in the first quarter of 2014, according to Savills, and an investor borrowing 70% of the purchase price would have needed a deposit of £48,421. They would have paid stamp duty at a rate of 1% - £1,614 - meaning an upfront cash outlay of £50,035.”


Compare that with today, when the average sold price of a buy to let property is £236,311 sir a borrowing with a 70% mortgage would need a deposit of £70,893 and a huge £7,089 stamp duty at 3% of the purchase price. The total outlay for the landlord now would be £77,892.

However, the Savills/Times data shows that rental yields have hardly changed.

What the article does not bring into the equation is the much higher additional payments landlords have to make outside of times of purchase or sale - local council licensing, more expensive letting agency fees, plus numerous charges for typically-mandatory checks and measures required for private rental property. 

In 2014 a landlord with a £112,983 mortgage on the market average 3.85% inters-only loan would have annual borrowing costs of £4,345 but at least an annual rental income of £10,072.

However in today’s low-allowance, high tax landscape, a landlord with the average £165,418 mortgage on a 5.48% interest-only mortgage would pay £9,058 a year; with typical annual management fees and repair costs of £2,934 they would have a pre-tax profit of just £2,820. 

Worse still, a higher rate landlord would pay £2,940 in tax - 104% of their profit, leaving them with an annual loss of £120. Many landlords will be above this average loss.

You can see the whole article here, but for many readers it will be behind a paywall.

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  • George Dawes

    Corporate ones backed by the corrupt establishment maybe but the plebs like us , no way , the prs is finished and it’s all part of the long term grand plan

    Were the ones who play by the rules that they set and break themselves

    Look at the monopolies commission as a perfect example

  • Ian Deaugustine

    On top of the financial analysis in this article, which I find accurate, there is another side of the coin: tenants do not heat the flat, there is no air circulation, hang clothes around to dry....then mould appears and...who is to blame? The landlords! I have a friend who rents his second flat in China, and he says that regulations are more balanced and free market-oriented in China than in the UK, ruled by the Fxking Tories! I miss the time when the Tories were honest.


    You want to try living in Scotland!

    Fery  Lavassani

    Ian, I have been selling my portfolio for the past four years and moved to rental market to Tehran. The rules are simple. Contacts are fixed for twelve months, and its up to the landlord whether or not, he wishes to renew it at the end. The best part is that the tenant is responsible for all maintenance and repairs. In another words the tenant will leave the property as they find it. The rent can come in two ways. Take an eighth of the value of the property as deposit, put in a bank as a bond, take the interest and refund the deposit at the end of the tenancy. or, take a big deposit and monthly rent. Eviction can take less than ten days. The yield is about 10%. Labour is coming with more red tapes. After 35 years as a private landlord, I leave the PRS happily.


    I miss the time when the Tories were TORIES. 😠That is why I will be voting REFORM.👍 I will not reward failure.😡 When I started voting there was clear blue water between Tory and Labour. You knew what each stood for. 👍

  • icon

    It is good to hear The Times acknowledge it no longer pays to be a landlord and that is not factoring in the sale price of a property with sitting tenants and CGT. Let us hope the activists see this article although they probably don’t read The Times! The Labour Party need to see it before slaughtering the PRS further. I am beginning to think we need to accept defeat and get out while we can. The Corporates will receive exemptions that won’t apply to the rest of us.


    I'm always reading people say corporates will take over, but why would they? The economics are still bad. I don't see how professional companies can get the yield they need.


    Chris, you make a good point. I too have also wondered how the corporates can really make BTL pay.

    • A S
    • 29 May 2024 11:29 AM

    Old fashioned corporatism was all about making profits. New world corporatism is all about investing to monopolise a market so that long term you can dictate prices, and profits will follow. It's also about investing in the political and regulatory landscape to be favourable to themselves.

    As a mom and pop landlord, we exist to make profits, nothing else. We cannot compete, especially when it isn't a level playing field with the regulations we have to adhere to that they don't. And we can't influence politics or regulations, that is obvious.

    • A S
    • 29 May 2024 11:34 AM

    Most people make the mistake of thinking that if they vote for their MP and ergo the government, then your MP/Government works for you. Some people are slowly realising that that is so far off the mark. MPs and Government work for whoever pays them. Do you really think that Rishi, an almost billionaire, will work for us for an £80k salary?


    @Chris Lee - 100% agree. Corporates in this space are simply large financial organisations that sweat assets entirely for the benefits of their fat cat directors, shareholders, and corrupt politicians and officials. Buildings and tenants are simply by-products of what they really do. If the numbers don't add up, and they just aren't anymore, they will just move the funds into more lucrative assets.
    Hilariously, the politicians still think that the corporates will come riding to the rescue. They won't.

    • A S
    • 29 May 2024 15:01 PM

    Not quite right Grumpy. How many loss making companies in the tech boom have market caps of billions? Think about why that is and that will give you the answer as to why Legal & General, John Lewis etc are investing in property


    100% And I'm doing just that...getting out!

  • icon

    I've finally given up investing in houses a lot of money already gone into 1 year high interest accounts, another 2 houses worth going in this week. I'm happy to take 5.5% interest with no hassle for the next 12 months.

    The government have destroyed the PRS, let them house all of the people that they have made homeless.

    They have created this problem, let them deal with the mess they have caused.

    The big boys will only take on the best tenants, the councils will make the rest homeless.


    I could have written the exact same D. They got us into this mes, they can get themselves out of it .. i ain't helping them. The SNP/Greens have absolutely destroyed the PRS in Scotland with their rent caps, no evictions, 6% stamp duty and anti landlord rhetoric! As they say "I'M OUT"

  • Kevin

    The only thing keeping me in, is long term tenants that pay on time. When they’ve gone so have I. Although I suspect by then i’ll be tied in by further changes in CGT. I sometimes wish I was more ruthless.

    Robert Black

    I also have very long term tenants who have always paid on time I have no agent involved When they leave I will not be releting so one more family for the council to deal with! No need to be ruthless just protecting my assets as best as I can

  • icon

    Adios PRS 🫣☠️

  • Sarah Fox-Moore

    Many more Councils will go bust under the ever increasing cost of Emergency Accommodation. God only knows how the government will fix the government-manufactured housing crisis and house All the people forced out of the PRS the government is purposefully destroying.

  • icon

    What about capital growth? Avoid the leasehold property and, with reducing interest rates and large pent up demand, I suggest there will be substantial capital growth over the next few years.
    Many selling landlords are in their later years and understandably wish to eat from the fruits of their investments. Others will have a differing view, but mine is that selling landlords who don't have to sell now, will rue the day they did.


    It’s not about “ not having to sell”, it’s just the right time for older landlords like myself. As you say…. Time to cash in before the grim reaper ☠️ Changes your plans 🫣


    Massive capital depreciation if you have sitting tenants.


    Spot on Ellie.

  • icon

    Kevin, as I said yesterday there is no way out for long term landlords.
    Huge Capital Gains tax on inflation & money devaluation x 24% + Reduced c/gains allowance from £12k to £3k.
    Then you can’t give it to a family member either and if you die in the first 3 years after giving it. The Capital Gains Tax you paid is lost and it all comes back into you're estate again for Inheritance tax purposes @ another 40%, if your portfolio is over £2m no allowances, there’s only one way out is to die, in the meantime keep serving the life sentence and paying the Penalties. RIP.

  • icon

    Just sell up. It's not worth it. I recommend investing in ETF tracker funds like the S&P 500 like Warren Buffett recommends. I'm paying into ISA and pensions too so the tax relief gives a big percentage jump.

    It' easy. I don't have to fill out tax returns , deal with dysfunctional tenants, A-hole agents who just want to milk you for money and not do any work. Unless like my agent contravening the Tenant Fee Act by taking a banned fee and refusing to refund it and not do the deposit paperwork correctly and refusing to fix that too. Dealing with the Council inspector (who was actually very good), building contractors who don't always turn up, overcharging, council tax, solicitors to defend mould and other false allegations, solicitors to evict, correcting both solicitors on their work - tenants' names spelt wrongly on legal paperwork. I had to keep telling my eviction solicitor I was selling so all of the endless repairs aren't an issue. Even sent them the legistlation to stop them wasting time and racking up my bill. My compensation solicitor trying to milk me for more money even though they sent our response of the the compensation pre-action protocol letter and the tenants' solicitors didn't respond. My solicitor wanted more fee and court costs to chase the tenants solicitors for their response! I don't want to hear from them you ****.

    Tenants texting at all hours with more stuff they have broken....

    CGT to pay on inflation. Risk I may lose the property altogether.... No, no no.


    That is a good summary Nick. I am thinking of selling up too.

    However, if you deal with everything yourself you do avoid the negligent agent problem and many of the problems that stem from that. If a repair is suddenly necessary, you can work with most tenants to solve it - not all, of course. Unfortunately, as you found out, there are other tenants who are unreasonable, and don't want to solve the problem. They just want to use it to make money or gain in some other way.

    The only way of dealing with the problem tenants is to give them a licence agreement and have a cleaner. That way you can repair everything immediately, and they can't stop you coming in to do the work. You, as the landlord, then are in the position to identify what needs to be repaired and are not at the tenants' beck and call.

    Having said that, there are problems with operating that way (serviced flat/licence agreement)- more work on a regular basis and also opposition possibly to licence agreements from the powers that be. Personally I can put up with more work, but not trouble with councils etc.


    I would prefer licences to tenancies. I require security over MY PROPERTY. The certainty I can get it back when required. With Scotland and the whole rent freeze / eviction ban thing. Labour....Pennycrook mentioned a hardship test for landlords selling up. You can see how that will go. The tenant will keep the property forever. It's all too much trouble, not much return, risk and hard work.

    My properties are in London so not sure I can do serviced accomodation. Never looked into it. If it meant I cuold control my property then ok. Happy to find a LT family and charge a 'normal rent' too.


    I think at the moment you can operate serviced accommodation because licence agreements are legal. However, you could only offer the flat for very short lets for 90 days of the years because of the rules in London.

    If you rent for over 90 days i.e. probably three calendar months then there is no issue about the length of the let, although serviced flats are not usually long term accommodation, but could be if, for example, the tenant were a company.

    The legal issue would arise if the licence agreement/serviced flat agreement were thought to be a sham i.e. that the occupant really did have exclusive possession.

    There could be a clause in the contract stating for example:

    "The owner will provide a compulsory cleaning service of the premises. Therefore the parties acknowledge that the owner and/or the cleaner may enter and remain on the Premises at any time and for any purpose without any interference by the licensee."

    Obviously in reality one would be respectful of circumstances, but one would have to provide regular services.

    In Wales, Welsh Labour abolished the distinction between a tenancy and a licence so it is not clear whether the option to operate that way will remain after the General Election. It is just about the only way of continuing letting.

    It may be that it will be necessary to have planning permission to operate a serviced flat/short fixed term let. That wasn't going to be the case, but the general election has probably changed the situation.


    Yes it was the 90 days restriction I was thinking about. I though planning permisson was requried otherwise.

    TBH the whole anti landlord rhetoric... Landlords don't have any friends. Not even the NRLA. We only have each other... I think there's better ways to make money than messing around with tenants, high taxes and being strangled in red tape.


    I believe, Nick, if you let the serviced flat for more than 90 days it usually falls still within C3 use (normal residential use). If you wanted to let regularly for less than 90 days then I think the flat would fall within C1 use (like a hotel) and you would need planning permission.

    It is possible that there could be an issue with the local authority over the C1/C3 distinction.

    Existing serviced flats/short lets were about to gain C5 designation, but who knows what will happen now. Local authorities did not want that automatic planning categorisation to happen and had written to Michael Gove to oppose it.

    Personally I would be really grateful for any clarification of the legal/planning situation.

    There are also going to be council tax implications. It was reported on Landlord Today earlier this year that:

    "Labour-controlled Haringey Council in London says the owners of short lets and furnished holiday homes will be forced to pay double their council tax for the periods of time they are empty.

    This will apply from April next year, 2025."


    Thanks Ellie. I will consider this before I try and sell.


    That is exactly what I am doing, Nick. I am waiting for more information about what the legal position will be with respect to short lets.

    I just want clarity i.e. to know that I would not be contravening any rules by letting for relatively short fixed terms and providing a cleaner.


    One thing, Nick, that I forgot to say, if you were considering offering an all-inclusive deal to your licensees, then look at "Huddle" for an all inclusive price for utilities - you can then just add that on to the rent.

  • icon

    As the article points out that landlords paying 40% tax with mortgages, get only 20% relief. This means they are even worse off and will remain worse off unless they decide not to rent some properties or reduce their mortgages or reduce their portfolio or do all of that. What Osborne started is not at all conducive for the landlords and certainly not worth being a landlord in today's market. My dad was in that category with not much borrowings. Now my brother has that problem. But he seems to be happy, inheriting the properties and all the work that goes with it. For a change, something to do with his life. Most if them are commercial with problematic flats above.

  • icon

    Chris, take off the blindfold, Section 24 for starters, if they have more than 3 Flats in a Block no License required. 24% tax beats 45% ands down. Do they supply individual Houses with gardens and extra maintenance,
    No all Flats shy high packed-in like sardines for maximum profit, their prices £500.00 pm more than private landlords per Flat. So Higher rents by a Country mile check it out, all their costs tax allowable + the government in their pocket the reason for the attack on us.
    We are all unequal before the Law.

  • icon

    Does anybody actually believe this is all not the complete intention of government policy? Smaller scale property owners, providers of decent housing at reasonable rent have been completely displaced by large corporates with the government complicit. I can see no other explanation for the way things have panned out.

  • Fed Up Landlord

    The wheel has turned full circle. No rental property due to Rent Acts 1915,1957,1977 restricting rent increases and evictions. Socialism.

    Then Housing Act 1988 opened up the PRS. Capitalism. Until the lefty wet liberal Cameron arrives in 2010.

    Then the left begins to rise. Socialism / Marxism. Schools and Unis full of lefty loonies.

    And voila! we are getting back to where we started.


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