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Revealed: what makes landlords tick

Wednesday 21st December 2016

A new research study of 2,500 landlords - one of the largest ever undertaken - has provided an insight into the UK landlord population's profile, motivations and plans for the future. 
 
Carried out by Kath Scanlon and Christine Whitehead of the London School of Economics, on behalf of the Council of Mortgage Lenders, the research indicates that the majority of landlords have an 'even keel' mentality.
 
Below is a summary of some of the most interesting findings...
 
Mortgages
 
- 49% of respondents own their property outright, with no mortgage debt
 
- 47% of the rented properties in the survey were backed by a buy-to-let mortgage
 
- Over half of buy-to-let landlords had loan-to-value ratios on their total portfolio of below 60%
 
- Only 1% of respondents reported to having loan-to-value ratios of over 90%
 
Portfolio size
 
- 62% of landlords own just one rental property
 
- Over half buy-to-let landlords own more than one property
 
- The mean size of a buy-to-let portfolio is 2.7 properties
 
Average age
 
- 61% of landlords surveyed are aged 55 or over
 
- Buy-to-let landlords are typically younger than other landlords
 
- 7% of landlords bought their first property within the last two years
 
Landlord profile
 
- The typical landlord owns a rental property close to home
 
- They are just as likely to manage property themselves as they are to use a managing agent
 
- Two thirds of landlords gain less than 25% of their household income from rent
 
- 1 in 20 participants said they made a profitable full-time living from being a landlord
 
- Median annual gross rental income was £7,500 (mean = £17,300, skewed by landlords taking exceptionally high rents)
 
- Gross rental income per month is between £416 and £830
 
- Almost 25% of landlords let property incidentally due to circumstances
 
- Approximately 14% entered the market to provide a home for a friend or relative
 
- Over a third of landlords are currently offering leases longer than 12 months
 
Future plans
 
- Many landlords who entered the market years ago remain active in the rental sector
 
- There is only a modest aspiration among landlords to increase or decrease property portfolios over the next five years
 
- There appears to be a modest drift towards disposal of some properties
 
- More landlords expect to reduce portfolios than increase them
 
- Over the next 12 months, 6% of landlords expect to reduce their portfolios (14% over five years)
 
- 21% of respondents said they were looking to reduce property holdings due to tax changes (36% of buy-to-let landlords)
 
- The majority expect their net income to stay the same or increase slightly over the next five years
 
- 16% of buy-to-let landlords expect to see their income fall
 
- Fewer than 20% of landlords said they would raise rents to cope with reduced cash flow
 
"While the overall findings are encouraging and offer a reassuring picture of relative stability, there is a certain irony in the researchers' conclusions that the landlords who will be most affected by the government's tax changes are those at the most professional end of the sector - those with large, leveraged portfolios," comments Paul Smee, director general of the CML.
 
"These landlords will be particularly hard hit by the changes in the treatment of mortgage interest and may choose to divest or moderate their property holdings."
 
"Given the government's longstanding interest in professionalising the sector, policymakers will need to be closely attuned to the risk of unintended consequences and, indeed, own goals," he adds.
              

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