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News: Landlords selling up made average gain of £80,000 in 2018

Mon, 13 May 19

The typical landlord who sold a rental property in England and Wales made a gross gain of £79,770 before tax last year.

This is according to the latest lettings index from Hamptons International, which shows that landlords' gains for selling properties dipped by almost 5% between 2017 and 2018.

The figures show that last year, 85% of landlords selling a property made a gross gain, with the remaining 15% making a loss.

Landlords selling up in London made a gross gain of £248,129, more than three times the average landlord in England and Wales. However, landlords selling properties in the capital last year typically made £24,000 less than in 2017.

Regionally, the average pre-tax profit made by selling landlords decreased in five out of 10 regions between 2017 and 2018 due to slowing house price growth.

The smallest average gains were available in the North East (£11,810), while typical gains increased last year in the South West (£3,460), East Midlands (£2,020), North West (£400), Yorkshire and the Humber (£4,490) and Wales (£5,340).

Landlords selling in the South East were most likely to make a gain, with 96% making a pre-tax profit in 2018. Those selling in the North East were least likely to make a gain, with 44% making a loss. 

There were four local authorities in England and Wales - all situated in the North East - where landlords were more likely to sell their buy-to-let for less than they paid for it last year: South Tyneside (49%), Sunderland (48%), Darlington (45%) and Middlesbrough (43%).

All top 10 locations which made the largest average gains for selling landlords last year were situated in the capital. Hamptons says this is due to London having the highest house prices and strongest rental price growth.

Landlords in Kensington and Chelsea made the biggest average pre-tax profit in 2018 - an eye-watering £1,072,880, having typically owned their properties for 10.6 years.

South Bucks was the region outside of the capital with the highest average gain of £278,310. 

"Over the 9.6 years that the average landlord has owned their buy-to-let, house price growth has driven their gains, with prices having risen around 30% over the period," says Aneisha Beveridge, head of research at Hamptons International.

"But given lower expected future house price growth and tighter mortgage regulation, more investors are shifting their focus from capital gains to yields."

Hamptons also reports that rental growth rose to 2.1% in Great Britain during April, the highest rate since January 2018, as the cost of a new let increased to £972 pcm.

Rents rose in every region across Great Britain. London had the highest rental growth with average rents rising 3.9% year-on-year, followed by the South West (1.8%) and the Midlands (1.6%).

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