Landlords are in it for the long term
21/07/2006 - Buy to let properties are on the increase as landlords look to property to provide a pension
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Resent research into the average buy to let landlord shows that they are in it for the long haul and are not looking for a quick turn around. The landlord is likely to remain one for at least another 10 years, most view the properties as their pension plans. The good news for landlords is that it was found that the rental market is as strong if not stronger than it was six months ago. Of all the landlords questioned, only around 8 per cent planned on reducing their port folio. Paragon who lend entirely on buy to let properties has released research that suggests the landlord will on average be in their late forties and has been a landlord for 10 years already. The average serious investor has 10.6 properties, 76 per cent of which are mortgaged and is usually self-employed. The other main professions to be attracted to property as an investment are those is banking and insurance, education, health, finance and construction.
Property investment was the primary source of annual income for almost 30 per cent of landlords and for the rest it was secondary. The findings showed that landlords tend to invest in property not only for the rental income but also the capital growth. The average loan to value on a property is around 50 per cent. The age group of investors are; 33.5 per cent are 36-45 years old, 31.2 per cent are in the 46-45 bracket and the over 55 year olds make up 25.6 per cent, the less than 9 per cent are in the age bracket up to 35. The deposit for the property, which needs to be around 15 per cent to capture the most lenders, is usually taken from savings but is just as likely to have come from equity release from an existing property but unlikely to come from releasing capital from an existing residential mortgage. More than 60 per cent of landlords receive rent that will cover more than 115 per cent of the mortgage repayments and the average is around 130 per cent. Rental yields, however, have decreased during the second quarter of 2006 to a four year low in England.
