To be better than average, you must know what average is
Are you the average buy-to-let landlord in the UK? You may not be able to learn if you are by looking in the mirror, but the latest Private Landlord Survey, the first that the Ministry of Housing, Communities and Local Government has published since 2010, provides interesting insight as to who invests in buy-to-let, what they earn from it, and how they find their investments.
Take a look at what the survey has found. How close to average are you? Have you invested ahead of the curve of average, or behind it?
As the average buy-to-let landlord, you probably:
· Operate as a private individual
Even though there are some compelling reasons to structure property investment as a limited company or partnership, 94% of landlords still invest in and hold their property as individuals.
· Earn almost half your income from property
The average buy-to-let landlord earns around £15,000 from rental income before tax and other deductions. This works out at 42% of the average total gross income of most landlords.
· Don’t own property as your main business
In fact, only 4% of buy-to-let investors do. Property investment is a contributor rather than the main business.
· Own one property
Like 45% of buy-to-let investors, you may own a single buy-to-let property. However, this percentage is down from 78% in 2010, because:
- 38% of buy-to-let investors own two to four properties, accounting for 31% of the sector
- 17% of buy-to-let investors own five or more properties, equating to48% of the UK’s private rental stock
· Are over 55 years old
59% of buy-to-let investors are 55 years or older.
· May already be retired
A third of buy-to-let investors are pensioners.
· Invested because you considered property to be better than other investments
Almost half of all buy-to-let landlords invested in property because they considered it as better than other investments available.
· Invested to contribute toward your pension
Like 44% of buy-to-let landlords, you may have invested for the contribution that property can make to your pension.
· Let property for six years
Seven in 10 buy-to-let landlords have let property for six years or longer. The average length of time that landlords let property is for more than 11 years.
· Are more likely to raise rents if you use an agent to manage your property
If you let through a letting agent or investment property manager, you are more likely to benefit from rental increases:
- 33% of agents raised rents on their last tenancy renewals, compared to 22% of DIY landlords
- 42% of landlords raised rents for a new tenant, while almost half of the agents did likewise
Funding property investment
When it comes to funding, those investors who invested long ago are more likely to have used a mortgage to buy property:
- 63% of buy-to-let investors with less than three years’ experience used a mortgage to buy their first property
- 73% of those who have been a landlord between four and 10 years used a mortgage
- 75% of those who have been letting for more than 10 years used a mortgage to fund their first investment
What the future holds for you
If you plan to keep your property portfolio unchanged over the next two years, you’re in good company. 53% of buy-to-let landlords feel the same.
If you plan to reduce the size of your portfolio, you think the same way as 10% of buy-to-let landlords. 11% of landlords plan to increase the size of their portfolios. Meanwhile, 5% of landlords are considering selling all the buy-to-let property they own – representing 5% of the housing stock in the PRS.
On longer tenancies
The survey found that investment property managers and DIY landlords felt the same way about longer tenancies:
- Three quarters are willing to offer tenancies of longer than 12 months
- 38% are willing to do so if a break clause is in place on the tenancy agreement
The major factor that would encourage landlords and investment property managers to offer longer tenancies would be legislation that makes it easier to remove problem tenants.
Are you an average landlord?
We suspect that you probably exhibit some of the above traits of the average landlord. You may own one property. You may have invested because few investments offer the same potential returns as buy-to-let. You probably used a mortgage to invest.
You may also be a DIY landlord or use an agent or investment property manager. If it’s the latter, you’re 50% more likely to benefit from positive rental reviews and rental income that keeps you ahead of inflation. Isn’t it time you benefitted from effortless property management and made certain you are better than the average landlord? Contact us on +44 0 1522 503 717 to find out how.
Live with Passion,