Landlords are All Change!

The private rental sector is thriving, with increasing numbers choosing to live in rental accommodation, and increasing number of individuals being attracted by the prospect of becoming a landlord.

The expansion of the market appears to be having an effect on the type of landlord that are investing in buy to let.

An increase in “first-timers”

A survey by Paragon Mortgages in October found an increasing number of landlords are those new to the rental sector. In a survey of its intermediates, the organisation found some 22% of buy-to-let business in the second quarter was carried out with “novice” landlords.

This is a small but significant increase on the 20% recorded at the same point in 2012 and suggests the success of the rental market is attracting people to the industry.

Paragon director of mortgages John Heron said; “We have seen over the past two years a steady rise in the number of first-time landlords entering the market.  It would seem that an investment in property is increasingly attractive against a background of low returns on cash and volatility in global markets.”

Changing motivations

An August study by YouGov revealed an increasing number of landlords are viewing the rental sector as a means of making money in the short-term rather than as an investment for the long-run. Its research found just a third of rental property owners saw their property as a long-term source of income in 2012-13, which is down from more than half (52%) only five years ago. 

Good parents and reluctant landlords

For a long time the vast majority of rental property owners have entered the sector in a bid to boost their income. However, that may no longer necessarily be the case.

A study carried out by ARLA in conjunction with YouGov has revealed there are two other types of landlord who are becoming increasingly common – good parents and reluctant landlords. The former are individuals who invested in the rental sector as a means of financially supporting their children, while the latter are people who want to sell their home but have been forced in to putting it up for rent due to the slow housing market.

ARLA found these two groups make up more than half of all landlords, accounting for 29% and 28% respectively. This is a substantial number and with such diverse motivations it is clear letting agents can no longer take a one-size-fits-all approach to their dealings with landlords if they are to provide a competitive service.

Source: Rentman