Most UK landlords are part time with just one property

Most landlords in the UK still consider renting out a property to be a part time activity and the majority own just one property and manage their portfolio as private individuals, new research show.

However, there is an apparent trend towards larger portfolios even although rents make up less than half of a landlord’s total income, according to the report from the Council of Mortgage Lenders (CML).

But the research, carried out with BDRC and the London School of Economics, does show there is evidence that rent is increasingly becoming a significant income stream for part time landlords.

In 2016 some 87% of landlords sampled manage their portfolio as an individual or as a couple, roughly unchanged from the 89% reported in 2010. The proportion operating as a company or other group comprises 14%, roughly on par with the 11% reported in 2010.

Likewise, the vast majority of respondents in 2010 and 2016, 92% and 95% respectively, do not consider letting to be their main business or occupation.

While most landlords still own just one property, there is an apparent trend towards larger portfolios. Between 2010 and 2016, the proportion of respondents who manage only one property fell from 78% to 63%. At the same time, the share managing two to four properties rose from 17% to 30%.

The report suggests that this could be due to the difference in the samples of the two surveys. However, the sharp contrast between the 2010 and 2016 data is likely to reflect to some degree an underlying increase in average portfolio size. Such a finding would be consistent with CML data on the number of loans for buy to let house purchases, which has increased by about 19% a year since 2010.

Generally, rental receipts make up less than half of a landlord’s total income. However, evidence suggests that rent is increasingly becoming a significant income stream. For about 90% of landlords, rental income is less than half of their total income, virtually unchanged since the 2010 survey.

However, the share receiving no rent, typically due to a property being unoccupied, has dropped substantially from 21% to 5% over the past six years. At the same time, the share receiving up to one quarter of their income from rent has risen by about seven percentage points, and the share claiming between one quarter to one half of the income from rent has grown by 10 percentage points.

The report suggests that this apparent shift may be attributable to differences in sample sizes. However, if it reflects an underlying trend, this would be consistent with the apparent increase in portfolio sizes, as it is easy to see how owning a larger portfolio would allow a landlord to draw a bigger chunk of their income from rent.

Overall the report says that while it looks like the typical landlord is still an individual running a rental business on the side, there appears to have been a gradual expansion of these side business, which, given the rise in demand for rented accommodation, should come as no surprise.

The survey also asked landlords how the changing tax environment would impact their lettings over the next decade. ‘Although it is hard to summarise the wide range of responses we received, nearly 16% cited government policy or tax changes as relevant factors motivating future plans for their portfolio,’ it adds.