Net rental yields on the average UK BTL property now comes in at 3.4% after taking into account the additional costs of maintaining a property, according to the latest data from Benham and Reeves.
The research from the lettings and estate agent showed that investing in the average BTL property will cost a landlord £289,824, with the average property currently commanding £1,276 per month in rent.
This equates to £15,312 of annual income, leading to a gross rental yield of 5.3% — up from 4.8% in the past 12 months.
However, this gross income decreases significantly once the cost of maintaining a BTL property is thrown into the mix.
Letting agent (£1,837) and general maintenance fees (£2,898), the cost of an annual gas safety certificate (£80), an electrical safety report certificate (£225) and landlord insurance (£427) all combine to decrease the landlord’s profit.
These additional costs come to £5,468 for the average UK landlord, meaning their estimated annual income generated is reduced to £39,844 for the year — not including the average cost of repaying a BTL mortgage, which currently sits at £1,201 annually.
Marc von Grundherr, director at Benham and Reeves, commented: “While gross yields have remained favourable, the reality of BTL investing is that there are a whole host of additional costs that need to be considered and accounted for, all of which eat further into the profit margins of landlords.”
