Posts with tag: part-time landlords

Majority of Landlords are Part-Timers with Just One Property

Published On: August 10, 2016 at 9:59 am

Tags: limited companies,mortgage interest tax relief,part-time landlords,private landlords,property portfolio

The majority of private landlords in England only run their lettings businesses part-time and own just one rental property, according to new research.

The survey, by the Council of Mortgage Lenders (CML) along with specialist lender BDRC and the London School of Economics, updates the findings from a similar study in 2010.

Majority of Landlords are Part-Timers with Just One Property

Six years later, the survey reveals there is almost no change in the number of landlords whose main occupation is not managing their property portfolios.

Back in 2010, 92% of landlords were part-timers, rising to 95% today.

Similarly, the proportion of landlords operating as individuals, rather than limited companies, is virtually unchanged. Six years ago, 89% of landlords managed their portfolio as an individual or couple, dropping slightly to 87% now.

This decrease may be a result of new tax relief changes that are due to be introduced in April 2017. From this date, the amount of tax relief that landlords can offset against mortgage interest payments will be cut to the basic rate.

However, limited companies will be exempt from the changes, which has prompted a move to this type of business structure. Find out more about the mortgage interest tax relief changes here: /mortgage-interest-tax-relief-changes/

Additionally, the survey highlights a move towards larger property portfolios.

Although the majority of landlords still own just one property, the proportion has dropped significantly since 2010, from 78% to 63%.

At the same time, the amount of landlords managing two to four properties has grown from 17% to 30%.

However, most landlords (90%) earn less than half of their income from their rental properties, which is almost unchanged since 2010. Does this suggest that the buy-to-let sector is becoming less lucrative?

With many recent legal changes affecting landlords, such as the new Stamp Duty surcharge, landlords must consider whether investment in the private rental sector is a viable option.

However, the CML does point out that the 2016 survey was only conducted in England, while the 2010 study covered the whole of the UK.

Increase in UK Part Time Landlords

Published On: November 29, 2014 at 12:25 pm

Author: Em Morley

Categories: Landlord News

Tags: part-time landlords

There has been an outbreak of part time landlords entering the market in Britain.

People are renting out properties alongside their day jobs to enhance their main income, says LV= landlord insurance.

LV=’s research revealed that over one in twenty, 7%, of British adults are letting properties to increase their earnings. They receive an average of £678 per month in rent, totalling almost £28 billion a year around the country.¹

Increase in UK Part Time Landlords

The highest rents are seen in London and the South East, at an average of £1,079 and £816 correspondingly. The West Midlands follows with £678, and East Anglia at £676.1

Around 60% is said to be spent on borrowing costs, management fees, and maintenance costs.1This would leave landlords with an average pre-tax profit of 40%.

The boom is mostly being fuelled by people who move into a new house, and rent out their previous home. More than half, 55%, of the part time landlords never planned to rent out their property. The reasons for moving are for a bigger property (15%), moving for work (10%), or wanting a garden (8%). 6% of landlords rented out their home because they moved in with a partner and did not, or could not, sell their house.1

Managing Director of LV= landlord insurance, John O’Roarke, says: “Renting out a property can be a great way to cover your costs if you are unable to sell or want to hold on to a home and make some extra money from it, but it is not without risk.

“Landlords not only need cover for any damage to their property, but they also need to think about their tenants and how they will house them if the property becomes uninhabitable, as well as the lost rental income.

“If you are thinking of renting out a property, you should check the current regulations for letting properties in your area and make sure you have the right cover in place.”1

¹http://www.landlordtoday.co.uk/news_features/The-rise-of-Britain’s-‘part-time’-landlords

Amateur landlords at all-time high

Published On: July 10, 2014 at 11:10 am

Author: Em Morley

Categories: Landlord News

Tags: amateur landlords,part-time landlords

Figures released in July 2014 suggest that the percentage of ‘amateur landlords’ within the property sector are at an all-time high. According to the National Landlords Association, these types of landlord, who work part-time to support their day-job, account for over 70%[1] of the industry.

Signs of recovery

A rise in the current rental market, coupled with the upturn in economic recovery, is attracting more amateur landlords into the market. The NLA findings also suggest that around 20% of part-time landlords will look to expand their ownership of properties in the coming year.

Future planning

Chairman of the NLA, Carolyn Uphill, was not surprised by the findings. Uphill said that a growing number of people are choosing to, ‘buy to let as an alternative means of saving for the future.’

These comments can be backed up by the statistics, which suggest that the average amateur landlord has four rental properties, generating gross income of around £31, 000. The NLA report indicates around a quarter of this gross income is used for maintenance costs.

Amateur landlords at all-time high

A need for caution

The figures suggest that around 40% of amateur landlords have utilized buy-to-let finance schemes to assist them with their purchases in the rental market. Buy-to-let lenders soared during the last-year, up by 32% on the last recording period.

Prospective part-time landlords however should not expect to sign up and simply watch the money roll in. Despite the obvious potential rewards, Uphill errs potential landlords to the side of caution. ‘Anyone considering a move in to buy-to-let,’ she said, must be, ‘thoroughly researched and aware of what it involves.’

Uphill also noted that with already having a regular job, becoming an amateur landlord can be, ‘very challenging,’ when trying to perfect, ‘juggling the demands of daily life.’

Support

It is vitally important that all prospective landlords are confident, educated and aware of what going in to the buy-to let market involves. Initial guidance is important for all amateur landlords.

[1] http://www.landlords.org.uk/news-campaigns/news/amateur-landlords-reach-highest-ever-level

One in Five Landlords don’t have Required Insurance

Published On: December 11, 2012 at 3:19 pm

Author: Em Morley

Categories: Landlord News

Tags: insurance risks,part-time landlords

Part time landlords are posing an insurance risk, as many do not follow all regulations required by law, says new research.

The increasing number of investors turning landlord has caused a rise in insurance difficulties.

7% of adults in the UK are renting out properties to earn some extra money alongside their main salary. They receive an average rent of £678 per month, with landlords in London and the South East making £1,079 and £816 a month respectively. They earn an average pre-tax profit of 40%, after borrowing costs, management fees and maintenance spends.

Insurance group LV= have warned that the increase of landlords in this sector could have accidental penalties, as many are not aware of all the legal requirements.

Homeowners could also suffer, if they are renting out a property they were previously living in, as their mortgage provider needs to be informed, and they may potentially have to remortgage.

Managing Director of LV=, John O’Roarke says: “Renting out a property can be a great way to cover your costs if you are unable to sell or want to hold on to a home and make some extra money from it. But it is not without risk.

One in Five Landlords don’t have Required Insurance

Ordinary home buildings insurance for the property you live in does not usually cover homes that you let. LV= explained that one in five (195) of landlords, over 400,000, do not have the correct insurance for their tenanted properties.

Furthermore, nearly 500,000 landlords have not had their property examined by a gas safety engineer in the last year. This could result in prosecutions and fines up to £20,000.

Almost a third (32%) of landlords have had their rental accommodation damaged, with an average of £1,200 in repairs. Of all these cases, 44% were damaged by tenants, flooding caused 17% of problems, and storm damage affected 8% of homes.

It is not always an investor’s choice to become a landlord, however.

LV= discovered that 55% of buy-to-let landlords never intended to become one. This amount is caused by people having to rent out their old houses, because they want a bigger home; they have to move for work; they’re moving in with a partner; or not they do not want to or can’t sell their property.

The insurance company says that to comply current regulations on rented properties, gas and electrical equipment must be installed and checked annually by a registered engineer. Tenants’ deposits must also be put into a deposit protection scheme, and some local authorities even require landlords to have a licence.

Those who practise as a landlord full time may use a letting agent to manage their property portfolios.

Letting agents often charge for all legislation to be compiled, to vet tenants and organise rent collection.

Despite this, LV= revealed that almost half (49%) of part time landlords decide to manage their properties themselves, but do not have sufficient insurance. This could lead them to a hefty fine if a tenant makes a claim against them, or if the tenant has an accident as a result of the condition of the property. Property owners are liable for any harm a tenant or member of the public may come to through the state of their property.

Landlords can also be responsible for damage to adjacent properties, for example, an overflowing gutter causing water damage to an adjoining home.

The number of liability claims made against property owners has been increasing recently, say LV=, due to a compensation culture within Britain.

O’Roarke concludes: “If you are thinking of renting out a property, you should check the current regulations for letting properties in your area and make sure you have the right cover in place.”¹

¹http://www.thisismoney.co.uk/money/news/article-2850652/Rise-time-landlord-leads-insurer-warn-owners-legal-safety-rules.html