Analysis by Octopus Choice into buy-to-let investing which asked landlords whether they planned to sell or stay in the market discovered those in the capital faced the toughest choice.
Falling yields and slowing house price growth was set to reduce profits, the research found, as the costs of running buy-to-let properties combined with the rate of growth meant many landlords would struggle to break even.
Buy-to-let hotspots
While there were some parts of London which remained buy-to-let hotspots such as Tower Hamlets, Barnet and Hackney, three quarters of landlords in the capital thought investing in rental properties would be less worthwhile in five years’ time.
Meanwhile in Scotland and the East Midlands, things were very different. Scottish landlords reported annual returns of 8.8% on their investment over an eight-year period and those in the East Midlands saw gains of 8.2%.
Across the UK as a whole buy-to-let investors were divided over whether they wanted to stick in buy-to-let or sell up. According to Octopus Choice’s survey, 56% of buy-to-let investors wanted to keep or buy more rental properties while 44% wanted to sell.
Tax changes
Amongst those who wanted to leave the market, a quarter blamed falling yields and tax changes while 19% were concerned about cooling house prices. Property management had become a burden for 61% of the landlords questioned, and 61% undervalued the costs involved.
Sam Handfield-Jones, head of Octopus Choice, said: “Brits still have an incessant love affair with bricks and mortar – but the hassle and cost of buy-to-let is a source of growing frustration, and some landlords may find that their once reliable day-to-day income is becoming harder and harder to come by.
“But this isn’t the case across all parts of the market, with money still to be made from the right property in the right region.”
