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Yes, it really DOES still pay to be a landlord

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: 


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.

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  • George Dawes

    Ill have some of what he’s smoking


    I think you need to be injecting to come up with what he has.


    I think you need to be an agent.

  • Ian Deaugustine

    I think they never had to dealt with a difficult tenant before.

  • Amanda Brown

    Thank you, I have owned my rental properties for over ten years. I have no mortgages, they have all doubled in value since I bought them. My rental income has increased significantly over the last couple of years and, going on the purchase cost, not current value, I am getting 15% yield on all of them. My costs have gone up significantly with all the new anti landlord legislation brought in by the government, I’ve had tenants vacate leaving £thousands of damage, I also have to repair ongoing damage caused by tenants (broken toilet seats, holes in walls, light fittings pulled down, etc) but trying to recover the cost from the tenants is fruitless. Increased agent fees, insurance premiums, etc. But for me, I would never give up, the benefits outweigh the problems, but if I had mortgages I would be finding things extremely difficult, mainly due to the extremely high costs of dealing with so many difficult tenants who unfortunately outnumber the few good tenants that I’ve had. I keep my houses up together and try to be a fair and understanding landlord, but am shocked by the attitude, lack of thought and air of entitlement of so many tenants. I’ve had very good tenants, but unfortunately not many. It’s not easy vetting tenants when you’re not allowed to know very much about them due to discrimination laws.

    Rob NorthWest-Landlord

    Do your own viewings. I meet all prospective tenants and make a choice.

    • S S
    • 04 June 2024 11:59 AM

    Alternatively find a GOOD agent - a good professional agent is actually worth it.
    As an independent RICS agent, we don't let to the first person, we make sure that the right person goes into the property. This so important in a block of flats - a the correct mix makes a community and a good letting agent/property manager knows that.

  • Fed Up Landlord

    Ah...the old " glass is half full" argument.
    It is half full... of tax, regulation, anti- landlord venom, and envy politics.
    Run for the hills....Diane Abbot will be Housing Minister...


    Let’s hope she isn’t education minister …. Didn’t she send her son to private school?


    God forbid, mind you we might get Angela Reyner don't really know who is worse.

  • icon

    I agree with the analysis in this article. That is the reason that, having been the owner of only one rental property for some years, I bought two more last year and am in the process of buying another. There is no other type of investment that gives you an income and a capital investment. Even if property flat lines for a spell, it will eventually continue to rise in value. However, I personally choose my tenants and do not buy on mortgages.


    eh - one example of other types of investment, just off the top of my head - Shares - don't they offer capital investment and pay dividends for income?

    • A S
    • 04 June 2024 10:02 AM

    Each to their own Polly. As Niall says, there are others investment categories that give potential capital growth and income.

    Statistically, yes you are likely to get a rise in value in property over a long enough period of time. However if your time horizon isn't long (i.e. you are looking to cash in for retirement at some point soon, which a huge amount of landlords are), then it doesn't stack up.

    Then place a value on your time. The sheer volume of admin that goes with being a landlord takes up your time. What is that worth in £££'s?

    Then place a value on stress. It is stressful and it will only get more stressful the more hurdles a Labour government will put in the way. What is the stress worth in £££'s?

    Add those up and do the numbers still stack up, compared to a 5% return in the bank or a 7-10% dividend yield for some shares, with no debits for time and stress?


    Polly your capital investment will diminish if Labour gives tenants lifetime occupancies. Back in the 1970’s properties with sitting tenants sold for half normal value. So unless your tenants leave of their own accord the property value will be greatly decreased.

  • icon

    I’m sorry but when the Duke of Westminster inherited his enormous portfolio of properties (£9bn) I didn’t see him paying any inheritance tax did I? I expect the others mentioned in the article have it all wrapped up as well.

    Amanda Brown

    How do you know this? Just interested to know:)


    Wrapped up in a trust in the Cayman Islands 🏝 😎


    That is because it is all in a trust. It is perfectly legal to avoid tax.👍
    If I had enough, I’d do something similar.😀

  • icon

    Er it was headline news when his father died …. The amount payable would have been enormous at 40% google it …. Guardian probably. All wrapped up in Trusts.

  • icon

    Amanda, don’t understand this haven’t time to check right now.
    So if I have house worth £650k rented for £1650.00 pm how do I get 15%


    It would be 15% yield based on a purchase price (many years ago) of £132000.


    Your return is similar to mine, Michael.

    Michael could have bought the house recently.


    If you are only getting £1650 pm on house worth £650k then there is a good case for increasing the rent. Or sell it and buy two at £300k and let for £1250+ each pm


    Mike Hall
    The CGT is horrific on properties landlords have owned for decades. Selling is simply too unpalatable from a tax (blatant theft) point of view to even consider.


    Hi Jo, you are correct in your assessment.
    I had an offer to buy a commercial property with a maisonette above, which we bought for £40,000 over 25 years ago.
    The CGT on that would be substantial and as I get over £20,000 per annum in rent, then it wouldn't be worth selling at the moment.
    When (not if) Labour get elected, the situation may become worse, with a total removal of allowances and a rise in the percentage payable.
    I am not looking forward to a socialist government, as they hate landlords with a passion.

  • icon

    My return was just over 2%, so would be regarded as a poor investment with today's interest rates. At the moment it is a negative percentage. The property was acquired fairly recently.

    If you add on to the poor return, the potential huge capital depreciation with sitting tenants, letting does not make sense.

    Furthermore landlords are not treated in the same way as other people; it is deemed acceptable to put massive burdens on them.

    Buying property now is akin to buying shares which are likely to go into administration - as tenants may gain the right to buy at a huge discount.

    • A S
    • 04 June 2024 10:06 AM

    A good comparison is likening buying property now with penny shares. They may go to the moon (if you hold on for long enough and there is a future favourable political environment) or they may go to zero (sitting tenants). Either way, there will be huge amounts of stress watching the journey.

    Not quite the extremes of penny stocks of course!


    I do agree that stress is an important factor.

    "Stress" is magnified 1000% because of legal uncertainty and the diktats by Labour politicians indicating that legislation will apply retrospectively so contracts are invalid - and always to the detriment of landlords and to the benefit of tenants. Nobody can operate a business without knowing where they stand legally. It is quite impossible.

  • David Hollands

    With the loss of tax relief on mortgage interest and section 21 and Gove's policies which have destroyed my pension. Being 68 it's impossible for me replan my retirement. This is Criminal. !!!!
    The last 15 year I have been investing my money into my 2 properties to help with my pension and retirement. Now as a private landlord it's impossible to make a profit from property and I am forced to sell up, this is not good for me or the tenants. WE ALL MUST VOTE REFORM !!!
    All the homeless will now fall back to the councils for homes which we all know are not available..!!


    Oh I am voting Reform 👍🏻


    Landlords are supporting Reform because they were the only party who has said that they would not proceed with the abolition of Section 21.

    Also they are supporting the small business person. The Conservatives have favoured the corporates over small landlords.

    There are also tax considerations. Tax is likely to be lower under Reform, than under Labour.

    Matthew Fine

    Ellie Edwards – Good points and probably valid. The issue is the more people who used to vote Conservative now vote Reform and unless they live in Clacton they will really have no idea who they are voting for and what that person believes in. The thinner the pool of people who want to become MP’s the more right or left wing their beliefs are, just look at the type of people the Green party are now attracting. One more vote for Reform in general means one less vote for the Tories and an even bigger Labour majority. AS a Landlord I remember too well what Labour has done for the property market. I agree that this county needs a reset and it usually takes Labours spend spend spend policies to do this, however we eventually have to pay for that and if they do not raise personal taxes they will have to raise money elsewhere like stamp duty, capital gains tax etc.


    I agree people often vote for candidates without knowing their beliefs on a particular issue.

    However, at the moment, in terms of housing policy, we simply don't know precisely the official housing policy of Labour, the Conservatives or the Liberal Democrats, let alone what the particular candidate in our constituency would be supporting.

    We do know that both Angela Rayner and Matthew Pennycook have said that they would get rid of Section 21 straight away, "no ifs and no buts".

    We also saw the content of the Tory Renters Reform Bill and how authoritarian and anti-landlord that was.

  • icon

    Everything he said may be true.
    But, despite my portfolio having about 50% equity it's of no benefit daily. (Several low value properties at around 25% bmv rent)
    By the time the tax man has had his bit, the ONLY reason there's any income at all is the 20% relief off my mortgages.
    I have lived on my savings for over a year. I've sold a house to bump them up and keep me afloat.
    I have to sell my own house in order that I can be mortgage free/safe somewhere.
    Please do not criticise my model, I'm an excellent landlord but have no business training.
    If I sold them all and took the equity I'd be accused of abandoning my tenants needs.
    We are not being treated fairly.


    Damned if you do, damned if you don't, seems to be the way landlords are seen these days.


    I agree with you and I think a lot of landlords are in a similar position right now.

  • icon

    Yield is a very bizarre argument.
    Yield on what exactly?
    A) Initial purchase price
    B) Initial purchase price plus improvements plus legal fees plus SDLT
    C) Current value (in who's opinion)
    D) Gross annual rent or net profit (if it's a bills inclusive HMO). How are compulsory licensing fees or safety checks counted when arriving at gross or net figure?

    With Section 24, CGT charged on inflation and rental income deemed to be unearned and therefore not entitled to the same tax relief all other self employed people enjoy when contributing to a SIPP, landlords have been treated appalling. As a direct consequence tenants are paying higher rents than would otherwise be necessary.


    This is the real point. All this ‘war on private landlords’ has achieved nothing positive only less housing and far higher rents. All at a time no Gov can realistically build their way out of the problem. They have set a catastrophe in motion which cannot now be averted.

  • icon

    "Not every landlord has a mortgage, in fact more tha. A third (38%) do not. "
    Apart from the interesting maths & grammar - by the author's own rationale this means that for the majority (62%) of landlords that do have mortgages it is likely that it does NOT pay to be a landlord.
    I have been a conscientious landlord for over 25 years with great tenants and a low ltv portfolio. Whilst I make a paper profit on which I pay tax, I actually make a cash loss. The Times article is more accurate and reflective of the bottom line after tax and regulatory burdens. This article seems self-serving and plain fiction. I am exiting the market as I fear there is worse to come.

  • icon

    It is necessary to specify the nature of the yield.

    "Current yield" is defined as the yield on the current value. The current value would be either based on the average of a number of valuations from estate agents/surveyors or the actual sale price of the house.

  • icon
    • A S
    • 04 June 2024 09:56 AM

    He's a letting agent. He's seeing his livelihood flash before his eyes. Of course he's going to talk up his sector, fully expected! But he's using a lot of poetic license to argue the point...


    Agent he may be, but I doubt any of our properties would rent for a high enough figure to interest him.

  • John Wathen

    The very rose coloured view of a highly vested interest.

  • icon

    The article may well be true. However, not all Landlords are mortgage free. Therefore, the article is not representative of all Landlords.
    I have stated numerous times that we now have a two tier market for Landlords. Those whom are mortgaged and those whom are not. The Mortgaged ones, especially if they have big mortgages will be struggling. Simple.
    Capital appreciation and I know that this has a bearing. However to realise it you are no longer a Landlord on that property, if you get my drift.
    The Governments have created this problem and seem not to see clearly the impact that their policies have had.
    I am selling and therefore reducing the choice for rentals on the market, apart from one house I have been able to do this without evicting and have waited for houses to become empty.
    I could have kept a much bigger portfolio but due to these policies I have had no choice but to sell.
    All of us have to respond to our own positions but spurious based arguments do not represent all Landlords.
    This article should read Landlord's with no mortgages are laughing all the way to the bank. That is not to say it is easy money though, but everything is relative.

  • David Saunders

    So mortgage free 2 bed property in London valued at around £450 K fetches around £20K per year in rent minus upkeep, tax, licence and insurance etc. Along comes scrapping of section 21 and Sadiq Khan (who has kept a very low profile since the General Election was announced) orders Starmer to allow rent controls or else. Value of property slumps to around £225K with only prospective buyer being the then sitting tenant so no worries, carry on letting.

    • A S
    • 04 June 2024 11:13 AM

    In this scenario David, the vested interests will describe a £20k return on a £225k asset as a 9% yield. Happy days! And as an added bonus, you can use the capital loss to offset your CGT liabilities, so you will pay less tax, you lucky landlord you!

  • icon

    It is the spectre of a Labour government that is alarming us all and rightly so. All I know is that one has to be extra cautious when choosing tenants and choose people who are likely to move on.


    I agree Margaret, but probably would go one stage further and not let myself unless it were permitted to give a fixed term tenancy with an end date.

    That might mean that only licences were a possibility. However, they could be abolished under Labour, and leave no option to let at all. Planning permission could be required for serviced flats.

    We don't even know if Labour would allow landlords to serve notice to quit if students are the occupiers.

    At that point, I will sell.

  • icon

    When regulations change the good Tenants attitude's soon change too.

  • icon

    😂 😂 😂 😂 😂 😂 😂 😂 😂 😂 Geeza break!!

  • icon

    Mike Hall, sounds good but impossible,
    you will not get a house in London for £300k maybe a one bedroom Flat and anyway you are not allowed to roll over the Capital Gains which means to government has taken a bite out of it.
    I had that experience before when I bought a house in wrong area and wanted to sell that one and replace it with one nearer home, by the time Revenue had taken their cut + costs put me in big debt

  • icon

    The elephant in the room is the Government and government in waiting. It should be up to the Landlord and tenant to decide on the agreement they want. As long as fair to both party's. If a fixed date is important then fine. I'm for long term tenants, my longest tenant moved in circa 2002 and has never missed a payment and keeps the property in excellent condition.
    I know dreamland.
    I was struggling to keep this property due to Government interference and mainly Section 24 which as a Landlord with mortgages etc was killing me. If you add then any extra I earn from work is taxed at 40% and not 20% it is daylight robbery. This is due to most of my taxed money was being paid to the lender in mortgage interest debt. Though still in this position now i'm in a far more comfortable position.
    The 25 year deals I had have not allowed for this tax change and then the interest rate rise, well it does not balance. Due to now working part-time I was unable to change mortgage deals.
    Fortunately, timing 3 property sales have enabled me to change the dynamics, but for Landlord's that do not have this option will have to get out quick and have done so.
    Therefore The Times article is far more relevant than the author of this article in my opinion.
    Four more to be sold leaving the remaining properties with a small or no mortgage, but 8 less houses to let.
    Well done the Blues and Reds and Yes to Reform. If these 2 party clueless members can mess up this industry no wonder the capital letter in Great Britain gets smaller every year!

  • icon

    The thing about selling one to buy one with the inflation factored-in. So say for argument sake you bought one 10 years ago for £300k and now selling it for £600k you are certainly paying tax on inflation, keep it simple pretend profit £300’000.00 X 24% = £72’000.00 c/gains so I am buying a replacement similar house for £600k but this also went up £300’000.00 in the last 10 years, so I am buying £300’000.00 worth of inflation on this one, while paying £72’000.00 tax on inflation on the one I just sold.

  • icon

    I see Rishi Sunak & Kier Stammer battling it out on TV, didn’t hear a word about the Renters Reform Bill doing so damage to 11.5m Renters & at least 2.5m landlords, that’s 14m potential votes lost.
    The idea of scrapping fixed term Tenancies was the con to try and kid Tenants that they were looking after them, must think they are stupid having forced up their Rents 30% in general.
    Do they think they would be voting for that and landlords also crippled at the same time with rules, regulations, taxes, penalties and licensing Schemes so we can’t vote for them either, have they got a death wish.
    I said many times before now this Bill had the potential to bring down the government and how true it’s turning out to be, why you think they shelved it before election.
    Theresa May didn’t realise what she was doing when putting it in the Manifesto or subsequently following on Bois Johnson nor Michael Gove when he wrote it as a junior Minister or brought it forward as Housing Secretary, now the coward Cabinet member is not standing for re- election but standing down still the damage he done with this Bill and further granting Councils the power to have Borough wide Selective Licensing that was not part of the Act but meant for 2 or 3 problem areas of a Borough, he was operating above his remit, good riddance.

  • icon

    One point I would make is the assumption some of the landlords have bought properties years ago and therefore their yield is higher than reported. What the article doesn't take into account what yield could you get if you sold the property and reinvsted in something else what would that yield be. You have to judge the efficiency of your property by the rent vs current value othewsie you would chnage it if it didn't hit the targets you set yourself. Naive comment in the extreme

  • icon

    Well you can’t change your investment without taking a tax hit so you have less to invest.
    Also if your yield was so much years ago and substantially more now on paper, deduct the value of your money then compared to now, (even a can of coke used to be 25p not too long ago, now £1.00 in many shops but its not worth anymore still only a can of coke just your money is worth this huge amount less).

  • icon

    I suppose it comes down to whether the tax penalty is more or less than the capital depreciation with sitting tenants.

  • icon

    Benham Reeves are touting for business as a lot of their clients in central London are leaving. The Times is correct and got it to a T. Benham Reeves, as the owner is a landlord himself, selects the properties and yield they wish to get is a lot smaller for the landlords, s it is quick let for them is needed with least work. The author says, "House prices have increased by 54% in the past decade and by 152% since 2000". This clearly is incorrect statement and very generalised. Benham Reeves is familiar with my property and other 800 properties in the 2 buildings in central London. None of those properties and others built by the same developer and other such developers in London has not appreciated 50% in over 15 years and unlikely to do so in the next 5 to 10 years. I paid a 20% deposit on an off-plan property between 2005 and 2007 and it completed in 2009 and I would have been pleased to sell it after about 10 years if it had gone up by 20%. A lot of the properties in the 2 buildings have been sold either at a loss or a very small profit within the last 15 years. I would sell it now if I got 20% uplift on the value, forget the stamp duty and legal fees paid to purchase as the developer wanted us to use 2 specific solicitors to complete the purchase, someone who understood the long process between reservation of property through completion. Benham Reeves knows a lot of properties that have not gone up by 20% so I am not sure why this article. Also over 15 years rents have not gone up very much, but the service charges have more than doubled. If we had not sold two other properties and reduced this mortgage, then our mortgage interest would have been very high, plus high service charges would have meant a loss to rent it. There have been massive work within 4 years of purchase as the developers had installed cheap floor boards and other works, like faulty plumbing etc.

  • icon

    In the article, he talks about 6% increase in property value per year. I would be happy with 2% uplift per year in some areas of central London. Benham Reeves are familiar with these properties or should be. They had no reason to write this article as it is total lies. A lot of landlords are aging ones and it is not in their interest to keep the properties unless they wish to pass or have already passed them to their children. We are hoping to sell about 4 to 5 properties within the next 14 months. Monies will be useful to reduce loans on other fixed mortgages. So we can decide to keep them empty, awaiting the best tenants. Our properties do not attract UC tenants, except one, which is rented to a charity, whose tenants are working but on low wages plus UC income. This property has gone up by more than 140% and it is not in central London, but greater London. But this has been rented at a lot lower rent to help the charity (who actually use their donations for good use, not like Shelter or GenRent), who helps low waged young people.

  • icon

    Michael, yes, I watched Sunak and Keir on Tuesday on ITV. No mention of Reform bill and nothing about housing and selling council properties etc. It was very badly organised with only 45 seconds allowed for answering somewhat some complicated questions. Neither of them were impressive on anything at all. We will get the same again or much worse.
    Today's debate was between all the parties. Angela Rayner did not say anything about housing as those questions were not asked by the public. On all issues happening, housing do not seem to be very important, even though there are probably a lot of tenants need housing. Everyone has swept those housing issues under the carpet but will raise it's ugly head after the election.


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