A typical landlord can now expect a gross annual rental income of almost £60,000, twice the UK average pay (£27,174) and will manage a property portfolio estimated to be worth £1.2m.
This is according to the latest BM Solutions/ BDRC Continental Landlord Panel.
The findings also show that while eight in ten (78 per cent) landlords see their property as their pension, and the majority (64 per cent) consider themselves as ‘professional’, one in three still do not have an exit strategy, financial or business plan or a formalised growth strategy in place.
With a usual portfolio comprising of between eight and nine properties, each estimated to be worth £140k, two thirds of landlords rely on buy to let funding through mortgages when purchasing a property, highlighting the need for landlords to be able to manage their portfolio efficiently in order to ensure repayment commitments are met.
Commenting on the findings of the research, Phil Rickards, head of BM Solutions said; “It’s easy to see why people are attracted to the buy to let market; it offers a tangible investment which can provide the long term returns that some other assets won’t. For those people considering the opportunities that this market presents it is however important to understand the financial and legal commitments being a landlord brings and to ensure that you undertake the right level of research and due diligence to increase your chances of success.”
Landlord confidence
61 per cent of landlords are confident in the outlook of the buy to let sector, up from 54 per cent over the same period last year. Optimism around capital gains (49 per cent from 27 per cent) and the broader economy (34 per cent from 13 per cent) are also significantly higher than Q1 2013.
Reliable rental yields
Over the past quarter, the average rental yield in the UK increased by 0.2 per cent to 6.2 per cent, remaining relatively unchanged from 6.1 per cent over the last 12 months. The strongest performing regions were the East Midlands and Wales achieving a return of 6.7 per cent; with Yorkshire and Humber seeing the lowest returns at yields of 5.7 per cent.
Void periods
A third (31 per cent) of landlords reported at least one void period over the past three months, a decrease of 3 per cent, with the average void duration increasing by three days to 62 days since the previous quarter. Voids duration is particularly long for landlords with smaller portfolios, increasing to an average of 70 days for landlords with one property. The proportion of landlords who would cover the impact of voids through rental income from other rental properties reaches 88 per cent for those with 11 to 19 properties, whereas landlords who own 1 property are more likely to cover the cost by using their ‘day job’ earnings (58 per cent).
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