One-in-five landlords plan portfolio expansion

One-in-five landlords plan to purchase an additional property over the next 12 months while becoming increasingly reliant on rental income, according to a study by BM Solutions.

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The survey of over 700 landlords found 15% had added property to their portfolios in the last quarter and the average number of properties purchased had risen from 1.6 in the final quarter of 2012 to 2.5.

However, two-fifths of respondents said they were using the rental income generated from their portfolio to support their monthly expenditure. The proportion of landlords who used their portfolio to prepare for retirement fell from 84% in the final quarter of 2012 to 78%.

BM Solutions head of sales Phil Rickards said: “The squeeze on spending does mean that we’re seeing more landlords using their rental income to supplement the cost of living. However, it’s important that those entering the market continue to see it at as long term investment as well as considering short term requirements.”

The study also found the average rental yield in the UK was 6.1% over the last quarter – down from 6.2% in the final quarter of 2012. Over half of landlords raised rents when new tenants arrived and the most common reason was to bring rent in line with local prices.

Experiencing a void remained common with nearly two-fifths of landlords reporting at least one void in the past three months. Void periods were greatest in the North East and lowest in Central London.

Only 4% of portfolio landlords planned to sell all their properties when they reached retirement and around 70% of landlords actively planned to live off the rental income. Two-fifths said the state of the housing market when they reached retirement would be an important factor on what they did with their property portfolio.

Article courtesy of Mortgage Solutions

RentPro property management software for letting agents and landlords.

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