Buy To Let UK Landlords Central Housing Group

Women Make Up Almost Half Of Buy To Let UK Landlords

More women than ever are becoming buy to let UK landlords, as their interest in property continues to outpace other investments such as stocks and shares and cryptocurrency.

Women now make up 48 per cent of the 2.6million buy to let UK landlords, according to analysis by London estate agent, Ludlow Thompson.

Whilst the number of male landlords increased by 10 per cent to 1.38million between the 2014/15 and 2018/19 tax years according to HMRC data, the number of female buy to let UK landlords rose by 17 per cent to 1.25million in the same period.

That comes despite high property prices and taxes making it much harder to ensure that buy-to-let investing is profitable than in the past – something anyone considering investing should remember.

The total income received from women buy to let UK landlords has also risen much faster than men’s in recent years.

Women’s buy-to-let income has grown by 27 per cent in five years, rising from £12.7billion to £16.1billion.

It has increased almost twice as fast as men’s, as the total income for male landlords grew by just 15 per cent during that same period.

The data shows that buy-to-let is proving to be a more popular investment amongst female buy to let UK landlords than other assets, according to Ludlow Thompson.

For example, women account for only 44 per cent of investors in stocks and shares Isas based on the latest HMRC figures.

They also represent just 15 per cent of Bitcoin traders, according to the latest figures from eToro.

Stephen Ludlow, chairman of Ludlow Thompson said: ‘The buy-to-let market has built a reputation of delivering long-term, stable returns to investors looking for income and long-term growth.

‘With the gender gap in buy-to-let ownership narrowing, it might not be long until we see a 50:50 gender split amongst buy-to-let investors.

‘This is a significant step considering the much wider ownership gap in other asset classes, such as equities and cryptocurrencies.’

Rob Dix, co-founder of property forum, Property Hub added: ‘There’s no reason property investment should appeal more to men, or be more easily accessible to them than women, so it’s pleasing to see that the split is nearly 50:50.’

But he added that the increase in income among female buy-to-let investors may have been influenced by more active tax planning among couples that invested in buy-to-let together.

‘In terms of women’s property income growing at a much faster rate than men’s, as this is drawn from HMRC data, I suspect it’s an artefact of couples engaging more actively in tax planning following the buy-to-let tax changes that were announced in 2015,’ he said.

Number of female buy-to-let investors continues to increase 
Tax Year Men Women
2014/15 1,259,000 1,074,000
2015/16 1,307,000 1,134,000
2016/17 1,345,000 1,188,000
2017/18 1,371,000 1,230,000
2018/19 1,381,000 1,254,000
Source: Ludlow Thompson

Whilst buy-to-let remains popular with those who like the familiarity of bricks and mortar, it can also be daunting for beginners.

One reason for this is that, in recent years, buy-to-let investors have been hit by a wave of taxes and regulations.

Landlords now face a 3 per cent stamp duty surcharge on second home purchases, whilst the removal of mortgage interest relief means they can no longer fully offset mortgage interest payments against the income tax they pay on collected rent.

Unlike some other investments, managing a buy-to-let property can also be labour-intensive.

Things to do before becoming a landlord

We spoke to experts to find out what potential buy-to-let landlords need to consider before taking the plunge.

1) Have a clear goal

The first step is to work out what you want to get out of property investing.

‘Are you wanting to build an asset base as a pension or a legacy, or provide supplementary income now?’ asks Dix.

‘Are you looking for a pure hands-off investment, or a part-time job?

‘This should drive all the decisions you make.’

2) Ask yourself whether it makes financial sense

Taking into account all the costs  and weighing them up against the financial benefits is crucial.

Rental income and potential capital gains will not only be eaten into by taxes, but your income can also be reduced by repairs, service charges, letting agent fees, insurance and regulatory costs such as legionella risk assessments or annual gas safety checks.

3) Educate yourself about the different options available

There are plenty of different types of property to choose from, so landlords don’t necessarily need to restrict themselves to single-family homes.

‘Within ‘property investment’ there are various flavours of ‘standard’ buy-to-let, as well as specialising in holiday lets, student accommodation, multi-lets, adding value through refurbishment, and more,’ says Dix.

‘There are plenty of books, podcasts and YouTube videos that you can turn to for a high-level overview, and to help you identify a strategy that’s consistent with the goals you identified.’

4) Speak to a mortgage broker

Buy-to-let mortgages work slightly differently from typical residential mortgages.

The amount you can borrow depends on the rental income, as well as your personal income.

Most lenders will typically require you to have a minimum deposit of 25 per cent and a minimum personal income of between £20,000 and £25,000.

‘Speak to a mortgage broker, assuming you plan to take advantage of finance,’ says Dix.

‘You should do this before going out to look at any properties, because your mortgage options might be limited depending on your personal circumstances and planned strategy.’

5) Decide whether you can handle a hands-on investment

Being a buy-to-let landlord can be a time-consuming and demanding investment.

As an investor you will need to be prepared to go through the lengthy buying process, find tenants, arrange repairs as well as keeping on top of the raft of regulations to ensure you don’t fall foul of the law.

Using a letting agent to manage a property allows for a more hands-off experience, but their fees will eat into your returns.

If you choose to be a DIY landlord and manage the property yourself, you need to be prepared to interact regularly with your tenants, be contactable in case of emergencies and keep on top of regulatory changes.

6) Spend time on the online portals

Just like you may have done when buying your own home, you will need to be prepared to put in the hours on Rightmove and Zoopla.

‘Spend time on online portals exploring potential investment areas,’ says Dix.

‘Develop a feel for how prices and potential returns differ between areas, get used to establishing how much a given property will rent for, and crunching the numbers for the return you’d expect to make after costs.’

How to decide where and what to invest in?

1) Consider the yield and capital growth prospects of an area

The rental yield is the percentage return you can expect to make back on the purchase price each year.

For example, a five per cent yield on a £200,000 property would amount to £10,000 per year in rental income.

It’s easy to judge an investment based on its yield, but don’t forget about the homes’ potential to grow in value.

‘While Northern properties tend to generate a stronger return on a monthly basis, history shows us that Southern properties have seen stronger capital growth,’ says Aneisha Beveridge, head of research at estate agent Hamptons.

‘The average London landlord achieved an absolute total profit from rental income and capital growth of £208,930 over the last nine years, which equates to a 4.5 per cent annual net return.

‘Of this, 80 per cent of was earnt from capital growth with 20 per cent from rental income, while in the North West, the reverse was true with 57 per cent of a landlord’s total profit coming from rental income.’

There is always an element of guess-work when it comes to predicting future housr prices, but looking out for planned improvements in the areas you are considering investing in will help you to make a more informed decision.

For example, it could be that the transport network is being improved, various major building projects are taking place, or that a vast new shopping centre is being built.

2) Decide on your target market and plan accordingly

Flats tend to offer higher yields than houses, according to Hamptons. Last year, flats offered higher gross yields than other housing types in 83 per cent of local authorities.

But this does not necessarily mean that flats are a better investment.

The average UK flat increased in value by 6.1 per cent between March 2020 and 2021, whilst detached houses rose by 10.7 per cent in the same period, according to the Land Registry.

Although you need to consider your re-sale market as well, the target renter in each area should help you determine what type of property to purchase.

Researching online, visiting the area and speaking to local agents will help to give you a sense of what properties are most in demand and the types of tenants you’re likely to attract.

‘In some areas, HMOs or family properties can be in higher demand,’ says Beveridge.

‘Families typically bring all their own furniture, while students generally look for everything to be provided by the landlord.’

3) Focus on buying well

The top 10 per cent of landlords who earn the highest yields pay 40 per cent less than the local average for their property, but rent it for 10 per cent more, according to Hamptons.

‘Often this means buying smaller properties that tend to yield better,’ says Beveridge.

‘Once you’ve narrowed down your target area, get to know a few streets that you’re interested in really well so you completely understand the values of homes when they come up for sale.’

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