Landlords who sold last year did so for nearly £80,000 more than they paid

Last year some 85% of landlords in the private rented sector sold their buy to let property for more than they paid for it making an average gross gain of £79,770, according to the latest lettings research.

But landlords in London made a £248,120 average gross gain, some 3.1 times more than the average gain in England and Wales, the research from Hamptons International shows.

The report, also shows that rents increased by 2.1% in Britain in the 12 months to April 2019, the highest rate since January 2018, taking the cost of a new let to £972 a month.

The landlord figures also show that in England and Wales those who sold had owned their property for an average of 9.6 years.

The average pre-tax profit earnt by a landlord who sold up fell in five out of 10 regions between 2018 and 2017 as house price growth slowed. Landlords who sold in the North East made the smallest average gain of £11,810, some £4,270 less than in 2017.

Meanwhile average gains increased between 2017 and 2018 in the South West by £3,460, in the East Midlands by £2,020, in the North West by £400, in Yorkshire and the Humber by £4,490 and in Wales by £5,340.

Landlords selling up in London and the South East were most likely to sell for more than they paid for it, with 96% of landlords making a profit in 2018. Those selling up in the North East were least likely to make a gain, with 56% selling at a profit and therefore 44% making a loss.

There were four local authorities in England and Wales where landlords were more likely to sell for less than they paid for it last year at 49% in South Tyneside, 48% in Sunderland, 45% in Darlington and 43% in Middlesbrough.

With the highest house prices and strongest price growth over the last 10 years, the top 10 local authorities where landlords made the largest gains in 2018 were in London. Landlords selling in Kensington and Chelsea made the biggest pre-tax profit, averaging £1,072,880, having owned their property for 10.6 years. South Buckinghamshire was the region outside of the capital with the highest average gain of £278,310.

Rents rose in every region across Great Britain. London had the highest rental growth with average rents rising 3.9% year in year, followed by the South West at 1.8% and the Midlands at 1.6%.

‘The average landlord who sold their buy to let last year did so for nearly £80,000 more than they paid for it. Over the 9.6 years that the average landlord has owned their buy to let, house price growth has driven their gains, with prices having risen around 30% over the period,’ said Aneisha Beveridge, head of research at Hamptons International.

‘But given lower expected future house price growth and tighter mortgage regulation, more investors are shifting their focus from capital gains to yields,’ she added.