Investment Landlords

According to the latest ARLA report, Investment landlords in the Private Rented Sector continue to remain calm in the face of the current economic situation. Over three quarters of landlords who were questioned for the Review, published Monday 29 September, will not sell their investments because of falling house prices. Instead, they expect to keep their property portfolios for an average of over 16 years. A further quarter intend to hold their investments for more than 20 years.

The Third Quarter Review shows that the average rate of return over five years on residential rental property bought outright averages 10.92%. For a geared investment with a Loan to Value ratio of 75%, the average return is 21.07%. Portfolio landlords carry an across-the-board Loan to Value ratio of only 57.3%. When making new acquisitions, they expect their Loans to Value to be about 70%.

Four out of ten of those surveyed expect to buy property over the next twelve months.

Ian Potter, ARLA's Head of Operations, quoted:

"These figures show that investors are still intending to make use of the availability of Buy to Let mortgages and that the profile of the typical Buy to Let investor has not changed since ARLA first launched Buy to Let following the last serious downturn. The average investor is cautious, mature and aims to support the Private Rented Sector for the long term by looking for the right property in the right market." According to the latest surveys that form the basis for the Review and Index, migrants from the new European Union countries continue to make an impact on the rental market.

Said Ian Potter, "Before the credit crunch, ARLA was forecasting sustained growth in the rental market, driven by a variety of domestic demographic factors. It is very clear that without the support of the Buy to Let investor, the sector would be seeing some very serious shortfalls in the supply of housing to rent in some areas given the downturn in the housing market." However, letting agents report they are seeing an increase in rental property coming onto the market because it cannot be sold.

Overall, this has been mainly houses rather than flats, except in London where the reverse is true.The Third Quarter Review and Index is based on the responses from 453 letting offices and 494 investment landlords during August and September.

It is the largest independent quarterly survey of its kind for the Private Rented Sector .

The Review and Index is available on www.arla.co.ukARLA, the Association of Residential Letting Agents, is the letting and residential management division of the National Federation of Property Professionals.

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