Your Business and Industry

2021 buy to let profitability, yield and voids

Despite shifting market dynamics and lingering economic uncertainty, the fundamental principles underpinning the UK private rented sector remain strong.

These insights are based upon the latest Q4 2020 landlord research by BVA BDRC, which surveyed 846 current landlords.

Profitability

Despite the challenges faced by landlords, profitability remains high. 88% of landlords are reported to be making a profit, with the overall landlord profitability index staying largely stable at +84.

Overall, around a third of landlords are said to make a full time living from their portfolios, doubling to two in three for landlords with 20+ properties. Of those making a profit, the majority claim to generate either a ‘moderate’ (61%) or ‘small’ profit (30%).

Yield 

The average achieved rental yield remained relatively stable in Q4 at 5.8%. Landlords operating in Yorks & Humber and the East Midlands currently achieve the highest average rental yields (6.4%) with those in Central London realising the lowest (5.1%). The typical yield generated tends to increase in line with portfolio size, with single property landlords achieving an average yield of just 4.2% vs. the 6.7% achieved by 20+ property landlords.

Voids 

The overall incidence of Q4 voids settled back to around one in three landlords following a sharp rise in the preceding quarter. The research also outlined that mortgaged landlords tend to manage larger than average portfolios and this was reflected in the void data where 41% had a recent void vs. only 24% of non-borrowers.

These are largely positive figures and serve to highlight just how well the BTL market is performing when it comes to meeting the demands of financially savvy landlords who are taking a longer-term view of the UK property market. 

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