Has there ever been a better time to be a landlord?
Date online: 20/03/2015
According to the latest findings from the Landlords Panel (BDRC’s quarterly barometer of landlord sentiment and the health of the PRS), landlords’ confidence is back to pre-credit crunch levels, with two thirds rating the prospects for their own lettings business in the next 3 months as good or very good.
On the evidence, this confidence is well founded. The incidence of both rental arrears and void periods, two of the most expensive problems landlords encounter, are at a post-credit crunch low. In Q4 2014, about a third (32%) of landlords reported tenant arrears, down from a high of 56% in Q4 2010. With no signs of tenant demand easing, just 30% of landlords reported that they’d had a property empty recently. Indeed, a mere 7% of landlords reported that they had seen demand for rental properties fall away to any extent in the last quarter of 2014.
And what of the financials? Well, more than 8 in 10 landlords report that they are making a profit from their lettings activity, with a quarter of these able to make it their full time living. And it’s not difficult to see why when you look at the figures. The average portfolio boasts 7.9 properties, is worth a sizable £1.1million pounds and generates £50,000 in rental income per annum. Engaging our maths brains for just a minute, this essentially equates to each rental property generating a tidy rental income of £6,300 per year and providing landlords with an average yield of 6.3%. And there could be better news to come, as half of landlords report seeing a trend for increasing rents in the areas where they operate.
So what does this mean for landlords, their portfolios and the size of the PRS? It means they’ve turned into an acquisitive bunch, with 29% of landlords intending to purchase an additional property in the next 12 months. Although expansion activity is more likely amongst more established portfolios (36% for landlords with 20+ properties), even 20% of those with just one property are looking to grow their portfolio in the coming year. With the rental market as it is, who can blame them?
So, has there ever been a better time to be a landlord? It seems certain that these key indicators of PRS health along with historically low BTL mortgage rates all point to it being a landlords market, and trust me, as a tenant in an extortionately priced, one bed flat under a flight path, it definitely feels like it!
Source: BDRC Continental’s Landlords Panel Q4 2014