Being a buy-to-let landlord is tough. According to data from estate agent Savills published earlier this month, higher interest rates and the removal of tax incentives mean that the investment model is delivering its worst returns since 2007, with “year one cash profit” slumping to 4 per cent. The agency says the situation may well get worse as the forthcoming Renters Reform Bill and stricter energy efficiency regulations “add to investors’ caution” and “further eat into profits”.
- Niche in buy-to-let market
- Demand ahead of supply
- Energy-efficient portfolio
- Shares trade far below NAV
- Dividend not fully covered
- High debt gearing
Landlords have the advantage over tenants. A surge in immigration combined with years of government failure to build any housing means that scores of tenants compete for a dwindling number of rental properties. The result is rent rising at its fastest pace on record, yet the data from Savills shows this is still not enough for landlords to push their paltry profit margins higher.