Serious investors ramp-up while accidental landlords sell-up, report shows
New research from Simple Landlords Insurance has revealed accidental and part-time landlords feel most negative about legislative changes and their future.
The data, which focused on the ‘emerging landlord’, unveiled a polarisation in attitudes towards the private rented sector. Those with larger portfolios, however, feel more positive about the future and are more likely to increase their property investments.
Landlords with two or more properties (30%) said they plan to buy at least one more in the next year, compared to 11% of landlords with single properties who are planning to extend. Meanwhile, 30% of single property landlords plan to sell, dwarfing the 8% of landlords with more than two properties.
Tom Cooper, director of underwriting at Simple Landlords Insurance, commented: “From Section 24 to Right to Rent, increased stamp duty, capital gains tax, regulation and licensing, you’d be forgiven for thinking it was all doom and gloom in the private rented sector.”
“But our evidence shows there are landlords adapting to the changes and emerging like phoenixes from the ashes. We wanted to find out more about them.”
The research revealed that landlords at the larger end of the market – or aspiring to get there – are least fazed by changes and in the best position to take advantage of increasing demand, stable house prices, and bargaining on stock being sold off.
According to the company, the emerging community of landlords is generally young, well-informed investors. Out of the 500 surveyed, the average number of properties held decreased with age. The average portfolio size was 2.16 for the 25-34 age bracket, while for 45-54 years olds, it dropped to 1.48.
The number of accidental landlords is also on the decline, falling from 18% in 2016 to 15% in 2017, widening the gap between them and professional investors.
“Times change, markets change, but property can still be a way to make money if you change too,” said Carl Agar, founder of The Home Safe Scheme and managing director at Big Red House. “There’s a clear difference between the big players and the dabblers, the old school landlords and the new kids on the block.”
A traditional landlord would see these new rules imposed and their returns drop, while those new to the market will compare those returns to what they’d get putting their money into a savings account, said Agar. “They’re seeing opportunity and building the rules, regulations and changes into their business model.”
He added: “Personally, I’m looking forward to a more professional and more prosperous private rental sector, driven by a new breed of landlord investor.”
As well as being bigger, younger and more professional, the ‘emerging landlord’ also invests different and diversifies their portfolio, the company said.
The report also found that holiday lets and flats are very attractive options for new landlords, with holiday lets attracting the highest proportion of new entrants to the market – 22% of these are landlords in their first year, compared to flats right behind with 16% new entrants.
Owners of HMOs in particular are also optimistic, with 43% looking to buy and only 4 planning to shrink.
“At Simple, we believe the right insurance can be the safety net that allows landlords to develop their strategies and their businesses for the future,” Cooper added. “Financial services need to keep up with the market and develop products that can grow with the landlords set to survive and thrive.”