Buy-to-Let Returns: 10-Year Investment Review
A turbulent ten years of regulation and tax changes have left many buy-to-let landlords wondering if their investments have paid off.
The same question has bothered property experts at Hamptons, a property consultant. They have delved into the figures to find answers for landlords who wonder if their efforts to make a profit have been worthwhile.
Data analysis revealed that the average landlord paid £243,368 for a buy-to-let property in 2014 and sold the home ten years later for £346,168, resulting in a capital gain of £102,800.
Over the same period, landlords picked up rent from the property of £152,641.
The total gross return was 105 per cent of the purchase price, which is not what the landlord pocketed as costs must be deducted.
Stacking up the numbers
Hamptons assumed the property investor spent 31 per cent of the total rental income on costs such as mortgage interest, management fees, repairs, and insurance. The figure comes from data on HMRC tax returns.
Crunching the numbers gives a gross return of £208,122 - an average 86 per cent return or 8.6 per cent yearly yield.
Returns do vary between regions.
London landlords have prospered the most with over a £450,000 cash return, despite higher property prices, which have reduced their annual yields to the lowest in England and Wales.
However, landlords in the North-West have doubled their investment returns compared to the capital.
Property investors in the North-East had the lowest ten-year cash return.
Buy-to-let investment returns 2014 - 2024
| Region | Average Purchase Price | Gross Capital Gain | 10Y Net Rental Income | Total Gross Return | % total gross return on investment over 10 years | Average annual % gross return | % of total return from rental income | % of total return from capital growth |
|---|---|---|---|---|---|---|---|---|
| North West | £113,337 | £72,660 | £62,903 | £135,563 | 120% | 12.00% | 46% | 54% |
| Wales | £123,591 | £75,440 | £67,171 | £142,611 | 115% | 11.50% | 47% | 53% |
| Yorkshire & The Humber | £120,558 | £68,190 | £63,245 | £131,435 | 109% | 10.90% | 48% | 52% |
| West Midlands | £144,554 | £81,910 | £73,478 | £155,388 | 107% | 10.70% | 47% | 53% |
| East Midlands | £137,202 | £73,150 | £69,106 | £142,256 | 104% | 10.40% | 49% | 51% |
| East of England | £222,669 | £110,690 | £100,156 | £210,846 | 95% | 9.50% | 48% | 52% |
| South West | £195,757 | £93,770 | £89,527 | £183,297 | 94% | 9.40% | 49% | 51% |
| South East | £278,960 | £123,190 | £121,089 | £244,279 | 88% | 8.80% | 50% | 50% |
| North East | £95,523 | £20,760 | £55,902 | £76,662 | 80% | 8.00% | 73% | 27% |
| London | £691,777 | £203,340 | £249,538 | £452,878 | 65% | 6.50% | 55% | 45% |
| England & Wales Average | £243,368 | £102,800 | £105,322 | £208,122 | 86% | 8.60% | 51% | 49% |
Source: Hamptons
Hamptons lead analyst David Fell said: "Interestingly, the analysis shows that there's roughly a 50:50 split between investors' total returns from rental income and capital appreciation. Historically, capital growth has been a bigger driver of landlords' gains, across the south of the country in particular."
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