Warning: Missing argument 2 for WP_Export_Utility::the_post() in /nfs/c04/h01/mnt/166073/domains/blog.letting-solutions.co.uk/html/wp-content/plugins/wp-exporter/utility.php on line 115

Biggest ever survey of UK landlords throws up interesting insights

At Letting Solutions, we’re always keen to know what landlords are thinking, what makes them tick and what the average profile is of one of the key parts of a well-oiled, functioning housing market.

Luckily for us, the most extensive research on this topic to date has recently been released by the Council of Mortgage Lenders (CML), with the largest ever survey of UK landlords throwing up some great insights into their profiles, motivations and plans for the future.

The study, undertaken on the CML’s behalf by Kath Scanlon and Christine Whitehead of the London School of Economics (LSE), found that landlords – both those with buy-to-let mortgages or otherwise – are taking an ‘even keel’ approach to the current marketplace, despite the possible challenges ahead.

Letting Solutions March 2017 Blog 1

Approximately half of all landlords possess no mortgage debt whatsoever. However, the quarter of buy-to-let landlords with the highest incomes and largest portfolios are likely to be most badly hit by the upcoming changes to mortgage interest tax relief, which may influence their behaviour in the coming year. As we wrote in our previous blogs, some landlords are pursuing ways to offset the worst effects of the tax changes – including incorporation and transferring ownership to a spouse or partner in a lower tax bracket – but landlords are advised to consult with a tax specialist before taking any drastic steps.

Promisingly, 49% of the 2,500 UK landlords surveyed owned all their property outright, with no mortgage debt at all. An unexpectedly high figure, perhaps, when you consider that the Private Landlords Survey carried out by the government in 2010 revealed that 77% of landlords relied on a buy-to-let mortgage to purchase their rented home.

Buy-to-let landlords, however, tend to have larger and more valuable portfolios than other landlords, so a big portion of the rental homes in the survey – 47%, in fact – were still backed by a buy-to-let mortgage, despite most landlords having no mortgage debt.

How many properties?

Despite public perception suggesting otherwise, 62% of landlords only own one property. As you would expect, buy-to-let landlords are much more likely to have a portfolio made up of multiple rental homes. Still, just over half of buy-to-let landlords own more than a single property, while the mean size of a buy-to-let portfolio is just 2.7 properties, going against the grain of the greedy buy-to-let landlord stereotype often portrayed in the media and elsewhere.

What’s more, there has been a pronounced shift towards smaller buy-to-let portfolios since the last similar CML survey was conducted in 2004.

What age? 

Landlords, like homeowners, are an ageing bunch, and this is something that has increased significantly in the last 13 years. In the CML’s last major survey in 2004, only 24% of landlords were 55 or over, in comparison to 61% today. Buy-to-let landlords are typically younger than other landlords, but not by much.

Are there any reasons for this? Well, one possible explanation is the falling rate of new investors into the market. In 2004, 18% of buy-to-let landlords had acquired their first property within the last two years. This has dropped to around 7% today. Most landlords tend to stay in the sector for the long-term – once they’re in, they’re in, seeing letting property as a long-term venture rather than a short-term fix.

What are the characteristics of the typical landlord?

The research showed that a typical landlord was originally motivated to become a landlord for pension purposes, as an investment for capital growth and income, or to supplement earnings from another job. Most landlords own property close to where they live, helping to give them good local knowledge of the area and the latest rental trends.

Meanwhile, median annual gross rental income was £7,500, but the mean was much higher – at £17,300. This, however, can be explained by the fact that some landlords command very high rental incomes.

A quarter of landlords only started letting property as a result of circumstance, while about 14% entered the market to provide accommodation for a friend or relative.

As for long-term rental agreements, the research found that over a third of landlords currently offer leases of more than a year on some of their properties. Those who don’t say this is because the demand is not there for it.

The future

Most of the landlords surveyed expect their net income to remain the same or increase slightly over the next five years, despite the challenges posed by Brexit, tax changes and tougher affordability checks.

Some buy-to-let landlords, however, are less optimistic, with 16% expecting their income to fall. However, tenants wouldn’t be expected to shoulder the burden if a landlord’s cashflow position deteriorated, with only a small number saying they would increase rents for new and existing renters.

For now, the rental market is showing plenty of signs of stability and solidity, which will please landlords and tenants alike.

For more information about letting your property, please get in touch with Letting Solutions on 01506 496 006.

As West Lothian’s first dedicated lettings agency, we have the skills and knowledge to help maximise your rental yields and keep your tenants happy.

We also offer free and instant online valuations to give you an idea of how much you could be charging in rent each month.