The survey looks at landlords who own three or less residential rental properties.
With buy-to-let having recently celebrated its 10th birthday, this survey is the first of its kind to look at the profile and strategies of the small scale buy-to-let landlord and uncover their motivations and future property investment goals.
Findings from the first Mortgage Trust buy-to-let landlord survey reveal that, far from being the exclusive domain of top managers and senior business executives (groups A and B), a significant proportion of buy-to-let landlords are actually junior managers, small business owners, general non-manual workers (group C1), or skilled manual workers (C2) – with these two groups accounting for 45 per cent of the total.
Nicola Severn, marketing manager of Mortgage Trust, says: “Buy-to-let is not an elite investment activity and is far from the exclusive preserve of the captains of industry or the rich and famous. Our new research shows that nearly half of landlords hold regular ‘every-day’ jobs.”
Average incomes tell the same story. More than half of respondents (54 per cent) had total annual incomes of between £25,000 and £50,000. Of those investors with just one buy-to-let property, only 19 per cent had an annual income exceeding £50,000, with a similar proportion (18 per cent) earning below £25,000.
Severn continued: “For the most part, it’s average earners who become small scale buy-to-let landlords. The average annual salary of landlords with one investment property is around £40,000.”
Looking at landlords’ motivation for investing in buy-to-let property, the most common reason given was retirement provision (32 per cent); other reasons included: having seen a friend make a success of buy-to-let (22 per cent); having read about success stories in the media (20 per cent); and not wanting to sell a property that was already owned (16 per cent).
Deposits for initial buy-to-let property purchase were sourced in the majority of cases jointly from savings or equity from another property. Interestingly investors with only one buy-to-let property were more likely to source their initial deposit from their own home (52 per cent).
In terms of future plans, buy-to-let investors expect to hold their properties for a long period of time: nearly a third (32 per cent) anticipate owning them for 15 years or more. The average length of tenure for all respondents is 11 years. As well as holding their existing investments for the long term, landlords have growth plans: from a current average of 1.6 properties to 4.8 properties over a ten year period.
Severn concluded: “Contrary to certain views, smaller scale retail buy-to-let landlords are not speculators looking to turn property quickly. Many link buy-to-let with retirement provision, and like their professional landlord counter-parts operating larger portfolios, they view buy-to-let as a long term investment activity with a horizon of 10 years or more. Although they hold less stock than professional landlords, over 30 per cent of all UK landlords hold only one property. Smaller scale investors therefore form an extremely important part of the private rental sector and it is encouraging that a significant proportion have plans to increase their involvement and expand their portfolios over the next ten years.”
