Where are the worst places to be a landlord in the UK?
For any private landlord picking the right buy to let property is essential. When you're investing such a large sum in your business you need to know you're picking the right property to make a profit. You'll look at location, the local market and of course the purchase price.
In other posts we've discussed the things you should look for in a new rental. Including the best areas of the country to invest in.
But what about the other side of the coin? Are there any areas you should avoid if you're looking for a healthy return on your investment? Where are the worst places to be a landlord in the UK?
Depends on your point of view
Saying any location is worse than another is emotive. It can also be highly subjective. You only have to look at those regular surveys which claim to find the worst place to live in the UK. Yet they always gloss over the good points and sensationalise the negatives.
Finding the worst places to be a landlord in the UK suffers from the same issues. After all, the worst place really is anywhere you don't make a profit. When you pay too much for a property in the wrong location. Or try to let a family rental in a student area. But they're business decisions. Nothing to do with the location.
Another definition could be the worst areas are those with the lowest rents. But that's not a reliable metric as the cost of the property is usually lower which means the yield could be higher.
So, we need to look at this another way. To find key performance indicators for private landlords as it were.
The cost of running a property
One metric we can look at is how much it costs private landlords to run their properties. This can include a whole range of costs including insurance, repairs, maintenance and legal fees. In other words, the day-to-day expenses needed to keep the property functioning and producing rent. We can then compare this to the amount of rent the property generates.
Kent Reliance did some interesting research which pinpointed the areas where landlords spend the biggest proportion of their rental income on keeping their property going. It found that on average the cost of owning a rental property was £3,632 per year. This doesn't include mortgage payments.
However, some areas were clearly more expensive than others which skewed the average. Landlords in Kensington and Chelsea in London spend around £13,000 per year. Though clearly their rental income is much greater than landlords in Burnley for example who spend just £1,380. So, let's look at the percentage of expenses against income. This is a more accurate way to measure the costs. And shows some surprising results.
Let’s return to our earlier example comparing Kensington and Chelsea with Burnley. The figures now look very different:
- Private landlords in Kensington and Chelsea spend 24% of income on their property.
- Private landlords in Burnley spend 38% of income on their property.
But, taking these figures as the only matrix, the worst place to be a landlord in the UK is Wales. Landlords there spend 41% of their income on their property. In Gwent for example even though landlords spend just £1,320 on their properties this equates to 46% of their rental income.
Of course, there are statistics and then there are statistics. The majority of landlords in Wales will be happy with how their business is progressing. Perhaps the only thing we can really say for certain is the worst place to be a landlord in the UK is anywhere you don't make a profit or where your property will remain empty for any length of time.
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