Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

With average net rental yields at 5.5 per cent, it’s clear that most landlords operate their businesses on fairly tight margins. And contrary to popular perception very few enjoy the luxury life.

In fact, 17 per cent of landlords – that’s approximately 255k – manage only to break even, or worse still, make a loss on their lettings activity. This figure rises to more than a quarter of landlords with just a single property.

Making a profit

Providing homes for others to live in is a business and if you’re losing money then it will soon become apparent. But even if your business is running smoothly, there’s always room for improvement and being complacent can lead to financial loss in the long run.

- Advertisement -

At the NLA we don’t shy away from discussing profitability, and we want to educate landlords about the different options available to help make a success of letting.

How well do you know your market?

Whether you’re a new landlord looking to enter the private rented sector or an old hand looking to explore different tenant markets for your property, there are a number of specialist sub-markets for you to consider.

So if your current plan isn’t working then we can provide ideas to help you change the way you run things and start turning a profit. If your business is performing well, we can help you to maximise your profits and take you to the next level.

Below we offer our overview of the main tenant markets for you to explore…

 

Tenant type

 

Typical rental yield

 

Key considerations

 

Students

6.2%

Students provide a high rental yield but may be trickier to manage as often it’s their first time living away from home. You can also expect to spend more on refurbishing between tenancies.

Shared housing

6.4%

Letting to multiple tenants offers one of the strong yields, but is often more complicated to manage with more rules and regulations that govern houses in multiple occupancy (HMOs).

Families

5.4%

Families tend to want greater stability and are likely to stay in the property for a longer period, meaning more sustainable tenancies. However, location and proximity to amenities and schools is usually a high priority.

Professionals

5.5%

Professionals are often regarded as the most sought after tenants and they form a large part of the market. This means that competition will be high and things like proximity to transport, leisure facilities and restaurants tend to figure high.

Housing benefit recipients

6%

 

Tenants in receipt of benefits represent more of a ‘risk’ for new landlords but provide a stronger yield than other tenant types. However, you must do your research on the current rates of benefits and what rent levels are accessible by this part of the market before you can be certain to make it work for you.

Company lets

4.7%

Company and commercial tend to be fairly low maintenance tenants as they typically tend to stay for shorter periods of time. However, this means greater churn and hassle so it may be wise to seek the assistance of a professional agent or speak with a landlords association when agreeing terms.

Older households

5.6%

Tend to stay for longer which means less churn and more stability, but accessibility will be important and property specifications may also be necessary.

Join the NLA and reinvent your business

At the NLA, we understand the importance of letting to the right tenants and finding the right market for you. NLA membership provides you with all the tools you’ll need to make a success of your business throughout your landlord lifecycle, and our range of membership packages means you’ll be able to find the right fit to suit your circumstances.

Our new campaign Reinventing Renting contains lots of handy guides and presentations to transform your lettings business and it will help you to:

  • Choose the right investment
  • Improve your financial planning
  • Expand your portfolio and maximise your gains
  • Reduce your exposure to a range of risks associated with letting property, such as impending interest rate rises, rent arrears and rogue tenants.

Don’t just take our word on it, see what other landlords say. Become a member and reinvent your business with the NLA today.

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.
Subscribe to LandlordZONE

LEAVE A REPLY

Please enter your comment!
Please enter your name here