Buy-to-let market remains tough for smaller private landlords

UK residential rental property returns slow in May: the buy-to-let market remains tough for smaller private landlords; annual investment performance for listed corporate landlords has been resilient

The latest monthly figures from property investment specialist, BondMason, show a slow-down in investment performance during May for both listed corporate landlords and private landlords in the UK’s residential rental sector.

However, the investment return for listed corporate landlords continues to show a resilient annual performance: up +5.7% p.a.

Comparing the performance of listed corporate landlords and private landlords in the UK, BondMason’s residential property investment research shows that in May 2019:

• the return from shares in listed corporate residential landlords was down -0.7% in the month of May; but up +5.7% annually (1 June 2018 – 31^st May 2019)
• the estimated return achieved by private residential landlords was down -0.6% in May; and up +2.9%  annually (1 June 2018 – 31^st May 2019)

Stephen Findlay, CEO of BondMason said, “The annual investment returns of listed corporate landlords remains resilient against a continuing backdrop of subdued house price growth. Whereas private property owners are continuing to be hit by the impact of tax changes and new regulations.

“This trend may continue for the near future as many smaller private landlords are choosing to reduce their property portfolios and sell up.

“Conversely, we are seeing an increase in the number of corporate landlords entering the market as they fill the gap left by private buy-to-let landlords, and to meet the continuing demand for rental properties in the UK.”

For comparison:

• annual house price growth slowed to 0.6% p.a. in May (down -0.2% month-on-month and remaining below 1% for six months in a row)³; and
• the FTSE 100 was down -2.5% in the previous 12 months ending 31^st May 2019 (down -0.2% month-on-month)⁴.