LANDLORD FINANCES BRIEFING

Briefing for campaigners and journalists, June 2023.

For more information please contact: Martha Dillon at martha.dillon@positivemoney.org.uk.

This document is intended for campaigners and journalists seeking to understand the financial and

tax incentives for English landlords, and the available data on their wealth.

Which policies encouraged the current generation of landlords to invest in homes?

The decline and subsequent rise of privately rented tenancies in England between the 1950s and

2020s, coupled with deteriorating affordability across the housing sector as a whole, was driven by

a series of government policy decisions. These are set out in detail in Banking on Property, and

2. Mortgage liberalisation. Regulations on UK mortgage lending and international bank

borrowing were peeled back during the 70s and 80s. Where formerly only building societies

provided mortgages, now private banks and other lenders could too. More generous

mortgages could be offered, lenders could tap into international money markets and

insurers accepted riskier loans. More money (in the form of newly created credit) could be

injected into homes, rapidly inflating prices.

3. The transformation of homes into financial assets. The rise in the prices of homes led to

people buying them, at least in part, to store and increase their wealth. This included

individual homeowners, private investors and companies. This ‘financialisation’ was also

fuelled by a collapse in social housing options - a drop in social housing construction, the

today, 10-15% of mortgages are BTL. These policies helped landlords tap into the

increasing value of homes, with a net increase of 2.8 million homes built or transferred into

the private rented sector between 1990-2022.

How do landlords make money - and how much money do they make?

The Bank of England estimates that 50% of landlords seek to profit from rental income, while 15%

seek to make money from house prices rising (capital gains), and 36% seek a mixture of both.

1

1

Table 12 Bank of England Staff Working Paper No. 976

Capital gains

homeowners own 7x more wealth - although their homes are worth ~5.7x more, there are only 1.2x

more of them.)

Although house prices are currently plateauing or decreasing, if they begin to increase again

landlords will be set to capture significant capital gains once more. House prices would need to

drop 25% to fall to pre-pandemic levels.

Rental income

Figure 1: landlord income. Source: the English Private Landlord Survey 2021.

As with capital gains, the data on rental income for landlords isn’t transparent. According to the

English Private Landlord Survey, in 2021 half of landlords earned under £15k in rental income

every year. But, less than 15% are solely employed as landlords - 35% are retired (and thus

2

This section is based on Positive Money analysis of English Housing Survey, English Private Landlord and

ONS House Price index data. 2023.

home all of their rental income, on top of other salaries and income streams. Of the remaining

landlords, the majority have an interest-only mortgage (see box). Only 22% of landlords have a full

repayment mortgage, meaning that, like homeowners, they have to pay back both a proportion of

the home’s total value and interest on their loan every month. These are the landlords most likely to

be at risk from rising interest rates.

rates are around 2.5%, as they have been in recent years, the modelled mortgage interest

payments are as low as 12-37% of rental income: meaning profits of 63-88%. Interest rates of 5%,

which are approaching in 2023, reduce profits to 26-77%. If interest rates reach 7%, the model

indicates that a landlord with a large loan (LTV 75%+) - around a third of landlords - might expect to

see monthly losses of up to 4%.

This example calculation illustrates that BTL landlords are unlikely to be facing significant personal

losses. However, they may increase rents in order to renew or take out new BTL loans if interest

Is it true that landlords pay a lot of tax?

● Use loopholes to pay income through companies as dividends, with lower rates of tax,

(increasingly common for new landlords);

● Deduct expenses for maintenance, furniture, insurance, ground rents and fees from income

taxes and deduct upgrades and extensions from capital gains taxes.

It’s worth noting that company landlords receive an even greater range of tax discounts and relief

options. Appendix 1 lists the full range of property taxes for company landlords.

Landlords also argue that they are more heavily taxed in the UK than internationally. Taxes are

context dependent but, even so, English key property taxes for individual landlords are often similar

to those in many comparable economies - both countries that have low proportions of private

renters, like France, Australia and the US; and countries where more people rent, like Germany,

Denmark and Austria:

Table 1: key property taxes across different countries. Coloured red where taxes are higher than in England.

So, how rich are landlords?

Landlords are significantly wealthier than the general population.

● Income. The median landlord has a gross income of £43k (rent and other income), and the

average gross income for landlords is £93k (thanks to a large proportion of landlords with

extremely high incomes, Figure 1) By comparison, the median gross income in the UK is

£32k, and the average is £39k.

● Savings. Data from 2016-18 indicated that the median landlord had saved over £55k. In

comparison, the national average was £7k - and just £400 for renters.

● Home value. A study from 2013 highlighted similar findings to the above. It also found that

In Banking on Property, we set out a series of recommendations for stabilising the housing system.

These included:

1. Commit to long-term house price stability

2. Restrict excessive mortgage lending

3. Reform property taxes to recaptured unearned gains in wealth

4. Significantly boost the stock of council and community-owned homes

5. Legislate for stable, affordable, decent homes for renters

Appendix 1 - property taxes

Table 2: property taxes by owner type.