The turnover and assets of a typical buy to let landlord in the UK have been revealed in a new survey.
BDRC Continental has found that the average landlord has a property portfolio consisting of eight buy-to-let homes worth around £1.3 million, which will be a mixture of flats and terraces. The landlord's portfolio will generate an average gross annual income of £57,000, while the typical landlord will have 6.3 buy-to-let mortgages to fund their property purchases.
One revealing insight of the survey is that confidence among the UK's buy to let landlords is at its lowest since research began in 2006. A director of BDRC Continental, Mark Long, said “Many landlords in Britain are concerned about the 2015 budget's impact which saw tax relief on rental properties being cut. The supply of rental homes is something we should all care about, as well as the potential knock-on effect for renters.”
The survey found that 59% of landlords said the budget will lead to their profitability being affected negatively with 81% of landlords with a portfolio of more than 20 properties being twice as likely as those with a single rental property to see a slide in profits.
Of landlords with just one property, 38% said their profitability would be affected, whereas 53% landlords who own between two and four properties said their profits would be hit - for 68% of landlords who own between five and 10 properties, said their profits would also slide.
However, just 39% of landlords who have a buy to let mortgage said that their short-term prospects could be described as ‘good or very good’. Mr Long added: “The budget’s impact has softened slightly among some landlords but among others we see strong feelings of anger and disappointment.”
Bank says HMO sector set to boom
Meanwhile, the UK's House in Multiple Occupation (HMO) sector looks set to boom over the coming year, says the Shawbrook Bank.
However, many landlords are confused about how HMOs should be valued.
The bank’s research has found that just over half (53%) of investors are looking to either expand or enter the HMO sector.
Indeed, growing numbers of landlords are looking to buy HMOs rather than traditional buy-to-let properties with 72% of these investors saying the opportunity of greater yields was the main reason for their investing.
In addition, 29% of landlords said capital growth in property prices was also an attractive incentive. One downside is that mortgage lenders have different approaches to stress testing and putting a valuation on HMOs.
A director of Shawbrook Bank, Karen Bennett, said: “There is no real valuation framework to provide clarity which causes problems for investors and lenders.”