Average Btl Landlord Makes Just £2k Profit
The average buy to let landlord in the UK is making a profit of just over £2,000 a year, one lettings platform reveals.
The findings from Howsy highlight that a landlord with an annual return of £13,000 will be left with an average profit of £2,140 because they have to fork out on so many hidden costs.
They say that the annual rental income on average is £8,112 and with average property price growth over the last 10 years being 2.85% per year, the investment profit is £5,223.
When these two sums are added together, the total return for a landlord is £13,343 per year.
Their research reveals that initial start-up costs includes stamp duty of £6,663 on average with agency fees to find a tenant costing £811, on average, means the costs total £7,425.
Average landlord will see 23.75 days of void periods
In addition, the average landlord will see 23.75 days of void periods every year, which equates to £535, says Howsy.
And with 73% of landlords buying their rental property with a mortgage, they will need to pay £6,921 on average in interest.
On top of this, landlords are also facing agency management fees of £1,622 on average, and repair and maintenance bills of £2,077, which adds up to £11,147.
Along with static costs, other unforeseen events could add more to overheads including evictions, which means with ongoing costs for a buy to let property, the profit for the average landlord is just £2,140.
The chief executive of Howsy, Calum Brannan, said: "One way to increase profit is to invest in an area with higher yields, but landlords should shop around to squeeze every last penny from a property on things like which agent to use and mortgage rates."
London rents soar
Meanwhile, it has been revealed that rents in London have rocketed with several boroughs enjoying double-digit inflation.
The data published by Home.co.uk reveals that Wandsworth, Hackney and Haringey are among the areas benefiting.
The firm is also predicting a wave of investment from landlords looking to enjoy growing rental yields.
Investors see an opportunity
A spokesman for Home.co.uk said that in terms of rent growth, the top performing boroughs in London will see activity translating into increasing sales as investors see an opportunity to capitalise.
He explained: "Rents in London have for too long been too low and recently had been kept down by over investment from landlords because of low interest rates."