The latest research conducted by the National Landlords Association (NLA) has shown that almost a quarter of landlords in the UK (24%) came to the buy-to-let market either accidentally or unintentionally, which is 360,000 people. In this blog post, we take a look at how these accidental landlords entered the buy-to-let market and what it all might mean.
Figures compliment previous studies
The figures released by the NLA in April this year match previous NLA studies from 2013-2014, which showed that part-time landlords, or those the NLA call ‘amateur’ landlords (landlords who supplement their day jobs with rental income) accounted for 70% of the buy-to-let market.
These part-time landlords, the NLA estimated, owned four properties on average and generated a gross annual rental income of £31,000, with 2.5% of this income spent on property related maintenance costs.
The latest NLA survey of 1,120 landlords was conducted in the final quarter of 2014. The survey showed that the reasons for entering the buy-to-let market accidentally were varied amongst landlords. Of all the respondents to the survey:
- 11% came to the property market completely by chance through circumstances such as inheriting property
- 5% became landlords when they acquired an extra property, such as those who moved in with their spouse
- 5% became landlords because they experienced difficulties selling their properties
- 3% decided to let their properties when they had to move either domestically or abroad for work
What region has the most accidental landlords?
As well as the number of accidental landlords, the research also reveals where these landlords are letting their properties.
The survey of 1,120 landlords found that Central London had the highest proportion of accidental landlords with 31%, which is likely due to high investments and low yields. This was followed by Wales with 29% and then the East of England and Yorkshire, both with 27%. Of all the regions, the North West had the fewest accidental landlords, with only 15%.
Interestingly, the research also showed that a number of these accidental landlords are renting out their properties at a profit. However, NLA figures show that 3 in 10 of these landlords (30%) with a single property either break-even or make a loss on their investment.
As we understand the challenges that landlords face, it’s unsurprising that 30% of landlords are struggling to turn an annual profit from their properties, and it’s thought by the NLA that many of the landlords struggle because they’re unaware of the costs and commitments associated with running a privately rented property.
Of course, being a landlord can be very rewarding, but it’s vital that any prospective landlord takes into account a full array of possibilities, no matter whether this is their only property, or another one that they’re adding to their portfolio.
A part-time landlord will typically have a day job, which will limit their time to manage and maintain their homes; particularly if they need repairs while a tenant inhabits them. For this reason, many turn to letting agents which reduces their profits through a management fee.
If you’re thinking about becoming a landlord, or if you’ve recently become one accidentally, it’s definitely worth putting some time aside to carry out research and if possible, talk to other landlords about their experiences.
Image courtesy of Shutterstock
Information correct as of 27/05/2015