A revealing new survey has given an interesting insight into the assets and turnover of the typical buy-to-let landlord. The investigation also assesses how confidence is changing in the sector.
Trends
Data from the analysis by BDRC Continental suggests the average British landlord has a portfolio of eight buy-to-let properties. These are likely to be a mix of both terraces and flats, with a total value of around £1.3m.
This portfolio generates a yearly cross income of around £57,000.
What’s more, the report shows that typical residential landlords have an average of 6.3 loans, with their purchases funded by buy-to-let mortgages.
However, the report also indicates that confidence amongst buy-to-let landlords is at its lowest since the research began in 2006.
Mark Long, Director of BDRC Continental, notes, ‘there are few happy ever after tales here. Many private landlords in Britain are really concerned about the impact of the 2015 Budget when tax relief on private rental properties was cut and given the housing shortage, the potential knock-on effect on renters and the supply of rental homes is something that we all need to care about.’ [1]
Lack Of Confidence
59% of landlords are of the opinion that the measures announced in the Budget will lead to the profitability being negatively affected.
81% of landlords with more than 20 properties were found to be twice as likely as those with a single property to experience a slide in profitability. Of those with one property, 38% said they thought their profits would be hit, in comparison to 53% of landlords with 2-4 properties.
For landlords with between 5-10 properties, 68% were fearful of a profit slide.
Of those with a buy-to-let mortgage, only 39% said that they feel their short-term prospects are either good or very good.
Long observes, ‘the perceived impact of the Budget has softened slightly amongst some landlords, but amongst our respondents we saw some very strange feelings of disappointment and anger.’[1]
Trends of a typical buy-to-let landlord revealed
Incorporation incentive
The research also suggested that 33% of landlords are seriously considering converting their investment into a LTD company. This figure has dropped slightly from the 41% recorded in the final quarter of 2015, explained by 7% of landlords already operating as a limited business.
Despite landlord confidence dropping, tenant demand shows no sign of abating. 39% of landlords recorded increased demand in their area. Landlords with mid-large properties are more positive, with 45% reporting more demand.
In the face of the perceived negativity, 72% of private landlords believe that investing in and renting property is more profitable than other investment types.
Mr Long concluded by saying, ‘more Britons rely on the private rental sector-both the private landlords who invest in property and rent it out and the millions of people who call those properties home. With almost a decade of data on the sector and 36,000 interviews, we can identify trends and its clear that the current sentiment among private landlords is very low. Today’s industry event is about understanding the market, discussing the challenges and debating the future, based on the solid foundation of the view for this sector of the housing market from the grass roots up.’[1]
[1] http://www.propertyreporter.co.uk/landlords/is-confidence-still-low-amongst-britain%C3%A3%C2%A2%C3%A2%E2%80%9E%C2%A2s-private-landlords.html