Whilst the majority of British landlords are still considering renting out a property a part-time activity with a low number of properties and self-management, big-time investors have – slowly but surely – started knocking on the UK’s property investment’s door.
This changing trend was revealed in a report by the Council of Mortgage Lenders. The report clearly showed a shift towards larger portfolios, regardless of the fact that rents only make up half the income of investors.
The research was carried out with BDRC and the London School of Economics and proves that rent is becoming a more significant income stream for part-time landlords.
This year, about 87% of the participating landlords managed their portfolio as an individual or couple, only a slight change from the 89% in 2010. Roughly 14% of those surveyed classified themselves as a company or other group, fairly even to 11% in 2010.
The vast majority of participants – 92% in 2010 and 95% in 2016 – do not consider letting out property as their main business or occupation.
Whilst this might still be true for the average landlord, there’s a clear trend towards larger portfolios. In the last six years, the number of those only managing one property dropped from 78% to 63%. Over the same period of time, the share of those managing two to four properties increased from 17% to 30%.
The recently published report suggests that this difference could merely be down to the change in participants in the two surveys. At the same time, the fact that the contrast between the two surveys is so strong indicates, to some degree, an increase in average portfolio size. These findings are also consistent with data by CML on the number of loans for buy-to-let house purchases, which went up by 19% every year since 2010.
On average, rent makes up less than half of a landlord’s total income. Evidence suggests, although, that rent is becoming a more important income stream. Roughly 90% of landlords describe their rental income as less than half of their total earnings, a number unchanged since 2010.
When it comes to those receiving no rent because a property is left unoccupied, the number dropped from 21% in 2010 to a mere 5% this year. This indicates once more how big the gap between supply and demand has actually become in the UK.
The number of those defining their rental income as at least one quarter of their overall income went up by 7% over the last six years. Over the same period of time, a total of 10% more landlords also stated their rental income covered between one quarter and half of their earnings.
In summary, CML finishes its report by stating that “while it looks like the typical landlord is still an individual running a rental business on the side, there appears to have been a gradual expansion of these side businesses—which, given the rise in demand for rented accommodation, should come as no surprise.”
