Why it is still Profitable being a Landlord in 2024

Date Published 14 June 2024

With all the doom and gloom from the recent months, we look at some of the points in which being a Landlord still reaps financial benefits in the present day.

Recently, Landlords in the UK have faced criticism from government policies. They have been portrayed as easy targets in a political battle aimed at gaining tenants' favour, often at the expense of those who have invested in the private rental sector. Home owners and Landlords have seen an increase in capital gains tax, added stamp duty costs, granted amnesty to non-paying tenants during covid, clogged up the court system to the detriment of repossessions and then sought, now unsuccessfully, to prevent Landlords from taking possession of their properties at all by way of the failed Renters Reform Act.

Here are some points which may persuade Landlords to keep renting in the current housing situation:

1) The demand for new homes far exceeds the number being built. With an annual deficit of approximately 100,000 homes, the supply of housing is currently at its most scarce in history.

2) Property prices have risen by 54% over the last 10 years and by 152% since the year 2000. This translates to an annual increase of +6% in the latter scenario, which represents a very satisfactory return. It is worth noting that inflation has been around 4.4% on average over the past 5 years, making property investment a more lucrative option.

3) Rental prices have increased by 31% since 2014, with an annual growth rate of 3%. The demand from tenants is currently at its peak.

4) Not all Landlords are burdened with a mortgage; in reality, over a third (38%) do not have one. As a result, higher interest rates impact certain Landlords.

5) The interest rates of 5.25% at Bank base are not considered high when compared to historical standards. The average rate over the past century has been 5.25%. Most Landlords are aware of this long-term trend, making current borrowing rates seem more ‘normal' than ‘high'.

Hopefully with the General Election round the corner Landlords can continue making a sustainable business from renting out properties.