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Landlords earn double the average wage
13 June 2014
An average landlord earns a rental income of around £60,000 a year and runs a portfolio of rental homes worth at least £1.2 million, according to new research.
The profitability of running a property business gives a landlord more than twice the average income of a salaried employee – which is £27,174 a year, says research for buy to let mortgage lender BM Solutions.
But looking at the business side of property shows some landlords could do better.
Many have no exit strategy for selling or retiring from their business, no financial planning and no business planning to grow or manage the business effectively.
Keeping good financial records is a specific problem for many landlords, says the survey.
Buy to let attractions
The survey also reveals the average landlord owns eight or nine rental properties worth a £140,000 each.
Two-thirds of landlords have buy to let mortgages.
Phil Rickards, head of BM Solutions said; “It’s easy to see why people are attracted to the buy to let market; it offers a tangible investment which can provide the long term returns that some other assets won’t.
“For those people considering the opportunities that this market presents it is however important to understand the financial and legal commitments being a landlord brings and to ensure that you undertake the right level of research and due diligence to increase your chances of success.”
The survey also looked at landlord confidence in the buy to let market.
Almost two-thirds agreed they were confident that the sector will continue to grow, offering increasing house prices and stable rents.
Returns on investment varied – from 6.7% in Wales and the East Midlands to 5.7% in Yorkshire and Humber. The national average was pegged at 6.2%, where the figure has sat for the past year.
A third of landlords confirmed that they had a void – a period without a tenant in a rental property – at least once in the past quarter. The average void was 62 days for landlord with large portfolios, but increased to 70 days for landlords with a single property to let.
Landlords with multiple lets are likely to cover the lost rental from other properties, while single let landlords had to make up the shortfall from savings or other non-property income.