Private Rental Sector
Landlords never had it so good
Things seem to be looking good for private landlords at the moment. Or are they? BDRC Continental’s Mark Long shares the latest findings from its Landlords Panel research
The word on the street is that private landlords have never had it so good. This is a great time to be a landlord letting properties privately – possibly the best in years. Rental rates are expected to rise, delivering stronger yields, which will in turn fuel the buy-to-let market. And there are plenty of indicators to
support the view that there’s never been a better time to be a private landlord: given the lack of affordable housing and difficulty accessing traditional mortgage products, young would-be house buyers are increasingly choosing the private rental sector as a solution to their housing needs, rents are increasing and rental yields are at their highest since the Landlords Panel research study began in 2006. Tenant demand is also up and
predicted to rise even further. Almost half of landlords (45%) have levied rental increases across their portfolio in the past 12 months. Looking forward, over a third (34%) state that they are likely to do so in the next six months. Many landlords are also in the market to
expand their portfolios. Oh yes, and few landlords are financially loss-making – just 3% have a 0% or negative yield - while those with the largest portfolios enjoy the greatest profit. More than four in ten landlords are ‘breaking even’ at best, whilst further up the portfolio-size ladder, seven in ten portfolio landlords (20+
properties) are making a full time living from their activity. Little wonder
then that, year on year, landlords feel optimistic about the private rented sector, with 57% rating the prospects as good or very good.
ISSueS However, while the fact that many landlords want to expand their portfolio is potentially good news for buy-to-let mortgage providers and intermediaries, it also raises an important issue. Many landlords see the apparent lack of competition and ‘affordable’ products in the buy-to-let market as a key inhibitor to further expansion. In fact, 63% agree ‘strongly’ that the
buy-to-let market would benefit from greater competition. Around 45% of landlords carry mortgage borrowing on their portfolio, a further 31% own property on a mixture of some owned outright and some with a buy-to-let mortgage. Those with buy-to-let borrowing carry (on average) 8.8 individual loans, across
34 mortgage introducer DECEMBER 2011 [Table 1]
a range of lenders. Landlords are the lifeblood of the buy-to-let market and the industry really cannot afford to have its key target market believing there’s little competition in the market and that the products that are available may not help their expansion plans.
SIze matteRS When it comes to frustration with the market and being in acquisition mode, BDRC Continental’s latest Landlords Panel research indicates that the size of a landlord’s portfolio really does matter. It is the larger, more professional private landlords (with 10+ properties) who are
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