Buy to let yields for property investors have slumped to a three-year low, according to new data from a leading lender.
Yields were 5.6% down year-on-year during the last three months of 2018, says a report from BM Solutions.
The lender claims professional landlords with portfolios of between 11 and 19 homes to rent were hit the hardest by the decline as their property business profits slide.
Although one in seven landlords are looking to add properties to their portfolios, one in four landlords are quitting the market because of the impact of tougher tax laws and more regulation.
Confidence in the financial market has halved in the past 12 months to the lowest level in five years, with just 9% of landlords feeling good about their prospects.
Tenant demand varied around the country – up 8% in the East Midlands and 6% in both the North West and South West, but down 11% in London.
However, 88% confirmed their property businesses are still turning a profit.
The data also revealed 31% of landlords work full time letting property, with 55% supplement their wages with buy to let rents.
Phil Rickards, head of BM Solutions, said:
“The buy-to-let industry has been through many regulatory changes over the past few years, and the effects of this are clearly being felt.
“However, the landscape is not entirely bleak. The proportion of landlords making a profit from their lettings remains at 88%, equalling the record high seen in Q3 2018.
“It is clear that the market is sensitive to the current legislative and macro-economic environment, and this has been reflected in the latest findings.”
BM Solutions is the buy to let brand of Lloyds Bank.