{"id":6100425,"date":"2024-11-12T20:34:58","date_gmt":"2024-11-12T20:34:58","guid":{"rendered":"https:\/\/www.buyassociationgroup.com\/en-us\/news\/landlord-profits-rise\/"},"modified":"2024-11-12T20:39:54","modified_gmt":"2024-11-12T20:39:54","slug":"landlord-profits-rise","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-us\/news\/landlord-profits-rise\/","title":{"rendered":"Landlord profits continue to climb despite rising costs"},"content":{"rendered":"

While mortgage commitments and other outgoings may have risen for all types of property owners, landlord profits have continued to increase.<\/h2>\n

Landlord profits generally come from the ongoing income generated by rental income<\/a>, which should be more than what you spend on any borrowing costs or ongoing maintenance, as well as the final profit made upon sale of the property.<\/p>\n

While some choose to buy, renovate and sell with a fast turnaround, known as ‘flipping<\/a>‘, the most popular property investment strategy is to use the long-term house price rises seen across the UK housing market to maximise their final return on investment when they finally come to sell.<\/p>\n

During times of rapid house price rises, landlord profits come more from the capital appreciation side of the investment; whereas when property price growth is slower, the focus tends to turn to properties that produce the highest rental yields in order to maximise returns.<\/p>\n

This is the market investors have been dealing with over the past couple of years as, for numerous reasons linked to global conflict, high inflation and the cost of living crisis, as well as a natural correction after the post-Covid boom, price growth has slowed down. At the same time, demand in the rental market has soared, impacting rental prices and pushing up yields.<\/p>\n

New research from Paragon Bank<\/a> has revealed that, even while things like mortgage costs have risen, this huge level of demand from tenants means landlord profits have actually hit their highest level since the first quarter of 2022.<\/p>\n

Returns have risen steadily<\/h3>\n

Paragon Bank’s study, which surveyed more than 700 landlords, found that nine out of ten (87%) of landlords said they had made a profit in the third quarter of 2024. What’s more, landlord profits were seven percentage points higher in Q3 this year than the same time last year, indicating a positive trend for buy-to-let investors’ returns.<\/p>\n

Of the 87%, almost one in five (17%) said they had made a “large profit”, while an average of 70% said they had made a small profit. There was also a reduction in the number of landlords who reported making a loss, which fell from 6% in Q2 2024 to 4% in the most recent results – while 9% broke even. This time last year, 8% of those surveyed said they had made a loss.<\/p>\n

Looking at how the market is predicted to change over the coming year, there is reason to believe landlord profits could be boosted further. Mortgage rates are widely expected to continue to fall, having already seen reductions over the course of this year. This means those who are remortgaging or taking out new borrowing should see cheaper monthly payments as time goes on.<\/p>\n

Meanwhile, while housebuilding is high on the government’s agenda, which should boost supply, there were no specific plans to boost supply in the private rented sector. This could mean that the current shortage being experienced across much of the housing market will continue, pushing up prices even further for tenants as demand remains high<\/a>.<\/p>\n

Boosting landlord profits<\/h3>\n

There are a number of factors to focus on in order to maximise your returns from an investment property. These include:<\/p>\n