While landlords derive a regular income stream from rent, a substantial proportion of an investors’ overall return comes from capital growth. But landlords can only see these returns once they sell up or re-finance.
Hamptons International estimates that last year over 150,000 properties were sold by landlords in England and Wales. Landlords who sold in 2019 typically owned their property for 9.1 years and on average sold it for £78,100 more than they paid for it.
This equates to a gross gain of 42% on their initial investment. In 2019, 84% of landlords who sold their buy-to-let property in England and Wales made a pre-tax capital gain.
With the highest house prices and strongest price growth, sellers in London and the South East made the most in absolute terms. The average London landlord made a gross gain of £253,580, over 20 times that of a seller in the North East where the average gain was £11,710. The South East followed, with a £104,930 average gross capital gain.
The top 15 local authorities where landlords made the biggest gains were all within the M25. Investors selling up in Kensington and Chelsea made the biggest gross gains. On average they sold their buy-to-lets for £924,010 more than they paid for them, having owned them for 9.5 years.