Before the pandemic had taken its toll on the UK back in March of last year, the BTL landscape saw landlords in parts of Liverpool and Bradford make an average yield of over 10%. The North West and Scotland were generally much more profitable for landlords than London, the West Midlands and the South East, which were all averaging between 1.4% and 2.1% yield.
Now, recent statistics from CIA Landlords has revealed that Brighton, Bangor, Portsmouth, Leeds and Lancaster are the top five most profitable areas for BTL landlords. Monthly profits of between £471 and £571 per calendar month see these areas prosper for landlords as opposed to those in St Albans who are potentially making a loss of more than £700 per calendar month. Bristol, Coventry, Manchester, Nottingham and Salford all join the top five in making up the top ten with profits ranging between £393 and £453 per calendar month.
It is therefore vital for those looking to get into the BTL market or to expand their BTL portfolio to note which areas are reaching the best profit margins – knowing the surroundings and taking into account the most recent statistics are integral for both investors old and new to succeed. According to CIA Landlords, only six locations remain profitable in London, with the majority of boroughs currently taking a loss. It seems BTL landlords must look elsewhere then if they want to make profits.
Stuart Williams, Director of Thirlmere Deacon, said that the Chancellors’ tax measures have resulted in ‘profit dents’ for BTL landlords, showing that these legislative changes are making it increasingly difficult for new investors to make a profit in the buy-to-let market.
He also believes landlords should review their current portfolios and aim to boost rental income and protect profits. Looking to another target market then, such as students and young people, would help with this as they typically need properties to rent themselves when studying.
People looking to invest in BTL properties should consider the long-term goals of a property. For example, purchasing low and keeping a steady income will see some landlords make much more profit over the years than attempting to make a ‘quick buck’ here and now. Knowing the area, then, is vital to making that a reality. By doing the research and getting an idea of which regions are coming into fruition, it is more likely that profits will be made.
Working on a strategy with realistic goals is always essential for those in the BTL market. Perhaps think about getting help from an experienced investor who will be able to advise on where to go next or which areas are looking positive for profits – such as the current top five. Research and discipline are the most important aspects as they will lead to gains in this market. By keeping on top of them, it will lead to a better financial situation in the future.