How Good Are Buy-to-Let Profits in 2019?

Buy-to-Let (BTL) investors in England and Wales make an average of £80,000 selling on their properties – before tax. And in London, the average pre-tax profit on a sold BTL property is a whopping quarter of a million (£248,120). That’s according to figures from top estate agents Hamptons International released this week. So who said Buy-to-Let was bust? The UK BTL sector attracted 36% less new mortgages in 2017 than it did in 2015 – when new landlord mortgages stood at 117.5k. Potential landlords have been put off the BTL sector in the UK because, over recent years, it has been hit by government tax raids. Stamp Duty for landlords was beefed up by 3% in 2016. Lending laws have stiffened up. And most crippling of all has been the change to mortgage tax relief: Consumer watchdogs Which? explain that, if you are a UK landlord, “by April 2020, you won’t be able to deduct any of your mortgage expenses from rental income to reduce your tax bill. Instead, you’ll receive a tax-credit, based on 20% of your mortgage interest payments.” But the new statistics from Hamptons International point to an enduring strength of the BTL – and that is, as Holborn suggested back in January this year, that “one of the key advantages of BTL is exposure to the underlying value of the property asset.” confirms that, “while a crackdown on tax relief and higher investment costs may have taken their toll on landlords’ appetite to invest today, rapid house price growth over the past 10 years has left long-term landlords with properties worth far more today than when they bought them.”  

Average BTL profit before tax on property sold – by region:

Region Average gain 2018 London £248,120 South East £108,220 East £88,410 South West £62,540 West Midlands £39,970 East Midlands £39.090 Wales £32,410 North West £30,160 Yorks & Humber £26,870 North East £11,810 Source: Hamptons International, 2019   Regional variation rules the UK property market – as ever! The biggest average pre-tax profit recorded was in the London borough of Kensington and Chelsea: £1,072,800. That’s almost a hundred times more profit than that recorded for BTL sales in the North East of England.  

Too late to cash in on BTL?

There’s almost 60,000 new BTL mortgages projected to go through in the UK over 2019. So the market can’t be that dismal. But it is certainly true that BTL activity is under pressure. A quarter of private landlords in the UK are looking to sell at least one property this year, according to figures from the prestigious Royal Institution of Chartered Surveyors. Aneisha Beveridge, Head of Research at Hamptons International, observes that, “more investors are shifting their focus from capital gains to yields.” Rental growth was up to 2% in April 2019, with a 3.9% increase year-on-year for London rents.  

Busting BTL!

The UK BTL market has always offered powerful options to expat investors. You can easily arrange a BTL mortgage for the UK using our very own Holborn Mortgages Team based in our head office in Dubai. We have years of experience in trans-national mortgage arrangement. And our hallmark is ensuring that all the paperwork is checked and perfect before it even gets to a potential lender; this prevents nasty surprises for our clients!

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