More than one-fifth of landlords are making over £1,000 in pre-tax profit on their portfolio each month according to a YouGov survey conducted by Shelter — but the NRLA says that the economic backdrop is forcing landlords to raise rents to make their properties “commercially viable”.
The survey commissioned on behalf of Shelter revealed that over half (55%) of landlords do not have a mortgage on their rental property, and more than one-in-five (22%) landlords are making over £1,000 of pre-tax profit per month over their portfolio as a whole.
While 88% of landlords without a mortgage say that the total rent they collect is more than their total property costs, only 70% of those with a mortgage can say the same.
Of these, landlords without a mortgage make an average monthly profit of £838 before tax, while landlords with a mortgage make a monthly profit of £666 before tax on their property portfolios.
The research found that 67% of landlords without a mortgage who have set up or extended a tenancy in the past year have raised the rent on their rental properties — leading to the perception that these landlords are ‘cashing in’ on the upward rent trend, despite the majority making a profit.
In response to this data, the NRLA claimed that private landlords are consistently facing some of the most challenging market conditions ever seen in the PRS.
“Contrary to the negative stereotypes which continue to shape popular perceptions of landlords, most want to sustain tenancies for as long as possible,” a spokesperson at the NRLA explained.
“Yet private landlords are consistently facing some of the most challenging market conditions ever seen in the PRS.
“Higher interest rates, coupled with the fact that many landlords have BTL mortgages, also often mean that many individuals struggle to make their rental properties commercially viable.
“Rising rents are caused by the ongoing supply crisis, which has resulted in a chronic shortage of homes across the UK and high headline inflation dramatically increasing the cost of providing quality accommodation.
“While landlords’ flexibility continues to be impeded by unfavourable market conditions and a punitive tax regime, more than half of NRLA members polled said that they had offered assistance to struggling tenants when approached.”
The Shelter survey highlighted that of the landlords who have increased the rent when they have extended or set-up a new tenancy, more than two-fifths (43%) said that their letting agency advised them to do it, with 31% reporting it was because it was the way the market was going.
BTL Insider also spoke to Graham Hayward, COO at Housing Hand, to ask if he believed mortgage-free landlords were cashing in on profit — or if there was another reason for rents being upped.
“The situation is not that clear cut,” Graham responded.
“While rents are clearly rising at a higher rate than previously seen, many factors are driving this — including lack of supply and increasing demand, plus anticipation of future rent ‘controls’ driven by the Renters (Reform) Bill."
