January 15, 2010 3:32 pm

Buy-to-let investors see strong returns in 2009

Buy-to-let investors enjoyed a 7.6 per cent annual return on their investments last year, compared to a loss of 8.8 per cent in 2008, according to new research.

This means the average landlord would have made a return of £12,740 in 2009.

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According to the latest Buy-to-Let Index from LSL Property Services, this was a combination of capital gains of £4,831 on each property and £7,909 in rental income.

In contrast, the average landlord would have lost £23,000 in capital in 2008 as the property fell in value, and earned £7,900 in rent for the full year, leading to a total loss of £15,100.

The prospects for the coming year are looking even more promising, experts say.

According to LSL Property Services, if house prices continue to rise at the current modest rate of 0.4 per cent per month - equivalent to 4.9 per cent for the full year - the average landlord will make a total return of £16,000 in 2010, equating to 9.8 per cent.

“Despite the worst recession in living memory, and despite house prices continuing to fall for the first few months of 2009, investment returns in buy-to-let were very respectable,” said David Brown, commercial director of LSL Property Services.

“The £12,700 the average landlord made on a rented property during the year recouped most of the losses in the housing crash of 2008. Brave landlords who added to their portfolios will be celebrating an excellent year.”

According to the index, arrears performed well in 2009 in spite of the recession. On average, 11.7 per cent of rent was unpaid by the date it was due, down from 14.5 per cent in 2008.

Serious arrears remained static, with 1.1 per cent of rent still unpaid three months after it was due. At the end of 2009, £282m of rent was unpaid by the date it was due, down from £346m at the end of 2008.

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