Rental yields are booming, hitting a ten-year high of 6.3%. This means buy-to-let properties are making more money than ever before. But it’s not all sunshine and roses. New legislation and rent control are starting to cause some serious headaches.

Landlord Lending – A Booming Business

The recent Landlord Trends report from Foundation Home Loans paints a picture of a market brimming with opportunity. 60% of landlords are using loans to fund their portfolios, holding an average of 5.3 mortgages each. And the number jumps to 14.4 for those with 11 or more properties!

The average landlord owes £665,000 in total, with an average of £125,000 per mortgage.

Limited Company Ownership is the New Trend

The report shows that landlords are increasingly choosing to hold their properties within a limited company, especially for new purchases. 67% of new acquisitions are now held this way. This strategy offers a number of advantages, including tax benefits and liability protection.

Rental Increases Are on the Rise

Landlords are facing rising costs, which are forcing them to raise rents. 74% of landlords increased their rents in the second quarter of 2024, triple the number from four years ago. This is due to rising management costs and increasing mortgage rates.

The Looming Threat of Rent Control

But it’s not all good news. The report shows that landlords are increasingly concerned about rent control and legislative changes. 55% of landlords say that rent controls would seriously impact their commitment to renting, and a third would consider selling their properties altogether if they were introduced.

Landlords are Nervous

While landlords seem less worried about other changes like banning discrimination against tenants or compulsory licensing, the potential for rent control is causing serious unease. The report shows that landlords are nervous about the future of the rental market, with many fearing that they may be forced out of business if new regulations are introduced.

What This Means for You

The report offers a clear picture of the current situation for landlords. While yields are high and there are opportunities for growth, the threat of rent control is a serious concern. If you’re thinking about becoming a landlord, it’s important to consider the potential risks as well as the rewards.