The latest research from Octopus Choice suggests that Britain’s buy-to-let landlords are divided over their future, due to recent tax and market changes.

The findings revealed that 56% of buy-to-let investors want to keep or buy more rental properties, while 44% are looking to sell.

Although the majority of the UK’s buy-to-let landlords still view it as a strong money-making asset class, many also think it will be on the decline in the future.

According to Octopus Choice, as the market consolidates buy-to-let owners are split across the country on what to do next, with many facing a dilemma on whether to stay or leave the sector. 

Of those looking to leave buy-to-let behind, some 24% blame dwindling yields, 23% point to tax changes and 19% blame cooling house prices. Meanwhile, 60% said that property management had become a burden and 61% undervalued the costs involved.

Despite the hassle and potential issues, the British love affair with property largely endures. Even some of those who are planning to sell their portfolio and exit the market still want exposure to property as an asset class. Some 27%, for example, plan to invest the money into their main property, while 37% want to re-invest in another asset class or in cash (30%).

Sam Handfield-Jones, head of Octopus Choice, said: “Brits still have an incessant love affair with bricks and mortar – but the hassle and cost of buy-to-let is a source of growing frustration, and some landlords may find that their once reliable day-to-day income is becoming harder and harder to come by. But this isn’t the case across all parts of the market, with money still to be made from the right property in the right region.”

The analysis found that there is a considerable regional divide when it comes to buy-to-let hotspots. London landlords currently face the toughest choice, with declining yields and slowing house price growth likely to reduce profits.

Average buy-to-let properties in the capital cost landlords more than £1,250 per year for the first five years, with an average London house worth £475,000 needing to be sold for £590,000 eight years later for a landlord just to break even. That’s even when taking into consideration the income generated over that eight-year period.

London hotspots can still be found – Tower Hamlets, Barnet and Hackney are three examples – but 75% of landlords operating in the capital believe investing in buy-to-let will be less worthwhile in five years’ time, higher than any other area.

It’s a different kettle of fish in Scotland and the East Midlands, with Scottish landlords already experiencing average annual returns of 8.8% on their investment over an eight-year period. Those in the East Midlands, meanwhile, are enjoying returns of 8.2%. 

There is a generational gap, too, the research found, with millennial landlords more likely to sell up than older landlords. Some 65% plan to sell one or more of their properties, in comparison to 29% of the over 55s. Younger landlords are also more likely to admit that managing a buy-to-let has become an annoyance (81%), compared to 39% for investors aged 55 or over.

Dealing with onerous tax returns was cited by millennials as their biggest irritation, while for older generations it was high one-off costs. Some 87% of millennials confessed to underestimating the costs involved with buy-to-let, including repairs and upkeep, insurance and initial legal and conveyancing fees, compared to just a third for those over 55.