Findings from the latest BM Solutions/BDRC Continental survey show that of those single property and portfolio landlords surveyed, 84% view their rental property as a supplementary income to their pension with six out of 10 of these landlords actively planning to live off the rental income at retirement.
A further four in 10 of those who agree that their property is their pension intend to make a decision dependent on the state of the property market once they reach retirement. Very few landlords plan to sell all properties in their portfolio when they reach retirement.
The survey also found that rental yields fell by 0.5% to 6.2% in the final quarter of 2012. In comparison, the average rental yield was 6.7% in the third quarter of 2012, 6.2% in the second quarter and 6.2% in the fourth quarter of 2011.
The strongest performing region was East Midlands with landlords on average achieving a return of 7.1%. In contrast landlords in Yorkshire and Humberside reported the lowest rental yield of 4.6%.
It also found that in the final quarter of 2012, on average 2.4 tenants were in arrears, a fall from 3.3 tenants in the third quarter of 2012. Whilst the proportion of landlords experiencing rental arrears has fallen to the lowest level since the second quarter of 2010 when it was 41%, the average amount owed per tenant was £2,613 up £247 since the previous quarter.
It says that strong and consistent tenant demand has seen void periods fall to their lowest level for over 12 months. Only 33% of landlords reported void periods in the fourth quarter of 2012, a 4% decrease compared to the previous quarter and a 13% decrease compared to the fourth quarter of 2011.
The average duration of a void period has fallen consistently over the past year to an average of 60 days. The greatest proportion of void periods was seen in the North East at 53% and the lowest proportion in central London at 20%.
‘The private rental sector remains an alternative source of long term investment for landlords for later life and this does not look like it is set to change. Whilst rental yields have dipped slightly, they still remain at the high levels we have seen over the past few years,’ said Phil Rickards, head of sales at BM Solutions.
