Half of landlords want out of buy-to-let properties
A survey has revealed that 44% of landlords are looking to sell buy-to-let properties as a challenging market takes its toll.
Octopus Choice, a P2P lending product, surveyed 1,000 landlords and found they are divided over the future of the buy-to-let properties market.
Despite two in five respondents saying they are looking to sell, 56% of investors taking part said they want to keep or buy more buy-to-let properties.
For those looking to exit the market, falling yields and tax changes are the most common reasons.
Meanwhile, two thirds of landlords said property management has become a burden and 61% undervalued the costs involved.
Octopus Choice reports that London landlords are facing the toughest choice on whether to sell up or stay in the market.
It calculates that a typical buy-to-let property in London costs landlords over £1,250 per year for the first five years. This means an average London property worth £475,000 would need to be sold for £590,000 eight years later for the landlord to break even.
Some three quarters of landlords taking part in the study said they think investing in buy-to-let in the capital will be less worthwhile in five years’ time.
On the other hand, Octopus says landlords in Scotland (8.8%) and the East Midlands (8.2%) are currently enjoying some of the best returns over an eight-year period.
Millennial landlords – those born after 1980 – are revealed to be more inclined to sell up, with 65% saying they are planning to sell one or more of their properties. This figure dips to just 29% among the over-55s.
“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,” says Sam Handfield-Jones, head of Octopus Choice.
“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.”