Landlords should not expect to make easy money from renting out homes, according to a buy to let lender.
Property can still generate healthy profits – but the days of speculation have gone, says John Eastgate, sales and marketing director at OneSavings Bank, which owns lender Kent Reliance.
The average buy to let produces a net profit of £6,500 a year from a typical £246,000 property, according to the study.
Landlords must put down a typical £73,908 deposit – around 30% of the value of an average buy to let property worth £246,360.
But the investment return is more than triple the deposit – an estimated £265,650.
Taking inflation of 1% a year over ownership lasting 25 years, the net profit after tax and expenses is £161,922 or £6,476.88 a year.
“Regulatory and taxation changes have altered the market dynamic, reducing its attractiveness to amateur landlords, and increasing the tax bills of many investors,” said Eastgate.
“In spite of rising costs, there are still healthy returns in property for committed investors. Policy change remains a threat and it is essential the role of professional landlords in providing vital housing stock is not undermined.”
How buy to let profits compare around the UK
|Deposit||Initial rent (Annual)||25-year totals|
|East of England||£70,153||£8,844||£322,451||£255,774||£343,955||£234,270|
|Yorkshire and Humber||£37,712||£7,032||£256,364||£137,494||£213,033||£180,824|
Source: Kent Reliance