Buy to let profits are down despite rising rents

Landlords with large property portfolios are failing to make profits despite months of rising rents, according to a new study. The number of student landlords and other buy to let investors with portfolios of 20 plus properties who made a rental loss surged from 1% in the third quarter of last year to 8% at the end of December. The increase was the highest level of portfolio landlords reporting a loss since the National Landlords Association started keeping records in 2006, at the peak of the buy to let boom. At the same time, portfolio landlords enjoyed higher rental yields than other landlords, at 7%, as average rental yields for all landlords fell in the last three months of 2011 to 5.9% from 6.7%. Rental yields for all landlords were at the lowest level in the year as almost half (46%) of landlords reported increasing rents and a third (34%) stated they were putting rents up in the first six months of 2012. Voids - the time rental properties stood empty between tenancies - fell from 41% in the third quarter of 2011 to 36% in the fourth quarter. Mark Long, director of BDRC Continental, the firm conducting the research for the NLA, said: “In a difficult economy a larger portfolio of property brings greater exposure to risk and those landlords are clearly feeling the impact of rising costs and a decline in profitability. “This is the highest level we have seen of landlords with 20-plus properties making a loss, and the biggest increase between one quarter and another. In previous research, the highest figure of loss making for this group was 4% in the third quarter of 2009. Some landlords are clearly feeling the pinch.” Despite a drop in profits, 80% of landlords considered the prospects for buy to let in 2012 were good.

Landlord blog

Siobhan Smith

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