By using this website, you agree to our use of cookies to enhance your experience.
By Marc von Grundherr

Director, Benham and Reeves


Is Buy To Let still worth the effort? You Bet!

£223.7 billion. That’s how much better off UK landlords are than five years ago when you do the maths on the overall capital appreciation of rented housing stock over the past five years. 

The reason that I highlight this is because in recent years my landlord friends have had a hard time (I’m a landlord too by the way). 

Falling yields and increased regulation plus an additional tax burden, have all weighed heavily on a sector that, after all, underpins the government’s woeful lack of social housing provision. And yet successive Chancellors seem to thumb their nose at us as if we are a blight, not the huge support that in fact we are.


Since 2016 UK rental yields have fallen from 4.1 to 3.6 per cent with typical monthly rents barely higher now than then at (Source: ONS). 

But despite the headwinds that us enterprising property investors have faced of late, I can argue that the near quarter of a trillion pounds that property values have increased by in just half a decade, might just be seen as adequate mitigation for those that otherwise feel somewhat disadvantaged by the sector.

Perhaps surprisingly given its lacklustre performance during the pandemic compared to other regions, Greater London landlords have fared ok. Yields in the capital have fallen from 4.4 to 4.0 per cent in the last five years, sure. 

But property values themselves here are still up by an average of £23,000 in the same period and, in my view, set to take off strongly having been overtaken by the regions for rather too long. 

This, because agents have hardly seen an overseas buyer since 2019 and typically such purchasers make up around 29 per cent of London’s property transactions and so it doesn’t take much working out that nearly a third of demand has been missing for a while. When they return, prices are sure to correct upwards - especially as agency stocks remain woefully low.

Our London offices are seeing strong demand from renters again. Frankly, rental demand is never going to wane inside the M25, is it? 

With all of the rhetoric around levelling up, London and the South East will always drive Britain’s economy and historically the capital alone accounts for over one quarter of our national GDP. This then dictates demand and jobs and therefore a sustainable appetite for housing especially amongst the upwardly mobile young. 



The likely implementation of HS2, Newcastle being boosted with Saudi cash and so on, won’t change London’s dominance versus elsewhere and therefore its attraction as an investment target for property buyers domestically and internationally is set to remain, you can be sure of that. 

It’s no coincidence that the clever, new, institutional build-to-rent money is heavily weighted toward London still. Some 43 per cent of it to be exact, according to the British Property Federation. 

Of course, you do have other places that you might put your money. The FTSE 100 for instance. 

However, in the five-year period in question the top 100 UK companies grew in value by just 2.0 per cent. Not much of an investment return, particularly with inflation bubbling as it is.

My point is this. Landlords have had it tough and have been squeezed. But, I’ll whisper this quietly so that Rishi Sunak doesn’t hear, we’re still doing rather well I reckon.

Marc von Grundherr is a buy-to-let landlord and is Director at Benham and Reeves, the 18 branch London estate and lettings agency.  

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

  • John  Adams

    I can't say I share this unbridled optimism, setting aside the tax changes on Mortage Payments, there are several dark clouds on the horizon. Firstly the absurd pressures on EPCs which would not be so bad if there was a clear and obvious logic to the process, so you could easily work out what each piece of work would achieve Then we have the whole saga of Heating changes, there are huge numbers of Pre-War homes in the country, heat pumps and electric heating are simply unaffordable both in terms of running costs and the installation, even with a grant you are still looking at over £5,000 per home for a system that will in older properties mean a colder home that will cost the tenant a small fortune in electricity. Whilst we need to go green, modern gas combi-boilers are extremely efficient and if you are going to need to use more electricity to achieve the same level of comfort then how is that an efficient use of resources? Then there is the National Grid, which has lacked serious investment for decades, and coupled with all these Electric vehicles & home heating systems, what's the chance that's going to fail every time we have a spot of bad weather and a big match on the TV?

    I can only see two things happening, rents will saw as costs are passed on to tenants, and the availability of rental accommodation will plummet. Whilst a flood of older properties on the market might be seen as a good thing for the young, many will struggle to bring them up to a reasonable standard, and probably end up stuck unable to sell them on very easily.

    Government should be encouraging PRS landlords to invest, not divest. We already have a housing shortage of many decades, and if people can't find a rental home what happens then?

  • icon

    Surely its a misprint its must be Councils that are £223.7b better off than before. As a LL, I am much worse off than 5 years ago. How are you counting yields, have you not counted all the extra costs that has been loaded on to us or is it farmers economics.

  • icon

    Ok you want to factor in appreciation, that will be the 83% of over priced houses & Flats that were sold for less than £500k courtesy Stamp Duty & Schemes manipulating the market, try telling that to the owners of bigger houses sitting there for ever and struggling to sell, again SD used as tool which is why they are not selling. I hope it stays fine for you all and don’t have to count depreciation.

  • icon

    London isnt driving the economy its sucking the lifeblood out of the rest of the conttry.
    Its ridiculous that HS2 is being built and farcical that the taxpayer is paying for it. It will be then sold off to a foreign pension company at a loss, like lots of other innfrastructure and the taxpayer will pick up the bill. Its going to draw money into London at the rest of the countries expense. London has had ridiculous amounts of public money pumped into iit. Basically the conservative pary came into power and ramped up prices of London property to get votes. I totaally agree with John Adams comments.

  • icon

    There maybe some truth in what you say but property prices in London weren’t ramped up many went down or at least traditional houses haven’t moved, just the Flats due to Schemes & SD, but all parts had that. The higher priced houses in London attract the higher SD 10% first buyer or second time buyer 13%, most of rest of Country are not affected by this as under this threshold. That’s not to say there is any advantage in London having paid far more for the property in the first place. The rest of the Country have benefited greatly in recent years with a lower entry price and less SD, therefore a far better return pound for pound and enjoyed and capital growth where as London stagnated, why else did people move out in droves to buy in other parts of UK outside London whether first time buyer or Investor.

  • icon

    I’m delighted to see so many detailed comments and such engagement with my article.
    I always aim to inspire debate and it looks like I’ve succeeded!
    Feel free to email me direct - my contact is on our website
    Thanks all


Please login to comment

MovePal MovePal MovePal