I read a great article a few months back which gave some fascinating insights into a typical landlords' profile. The research, by Kath Scanlon and Christine Whitehead of the London School of Economics was carried out on 2500 landlords, and had some very interesting findings, a few of which I'd like to share with you in this blog.
The Typical landlord
- The typical landlord owns rental property close to their own home
- Their original motivation to become a landlord was as a contribution to their pension provision, as an investment for capital growth and income, in preference to other investments, or to supplement earnings
- Two thirds of landlords gain less than 25% of their household income from rent. Around 1 in 20 said they made a profitable full-time living from being a landlord
- Median annual gross rental income was £7,500, but the mean was £17,300
- Nearly a quarter of landlords ended up renting out property incidentally due to circumstances, while around 14% entered the market originally to provide a home for a relative or friend
How old are landlords?
- Back in 2004, only 24% of landlords were aged 55 or over, compared with 61% today
- Buy-to-let landlords are typically younger than other landlords
- In 2004, 18% of buy-to-let landlords had bought their first property within the last two years, compared to around 7% today
How many properties do landlords own?
- Some 62% of landlords own only a single rented property
- Buy-to-let landlords are more likely to have a multi-property portfolio than other landlords
- Just over half of buy-to-let landlords own more than one property, with the mean size of a buy-to-let portfolio being 2.7 properties
How many landlords have mortgages?
- According to the survey of 2,500 landlords, some 49% of respondents owned all their property outright, with no mortgage debt at all
- 47% of the rented properties in the survey were backed by a buy-to-let mortgage
- Among buy-to-let landlords, over half had loan-to-value ratios on their total portfolio of below 60%, with only 1% reporting loan-to-value ratios of over 90%
Landlords' plans for the future
- Landlords appear to take a long-term view of their property holdings, and many landlords who entered the market decades ago remain active
- More landlords expect to reduce their property portfolios than to increase them
- Over the next 12 months a net 6% of landlords expect to reduce their portfolios, while over the next five years a net 14% expect to do so
- Only 21% of landlords overall cited any element of tax changes as part of their reason to sell
- Overall awareness of the various tax changes was extremely variable
- The great majority of landlords expect their net income to stay the same or increase slightly over the next five years