The latest edition of the government’s English Housing Survey, published earlier this month, attempted to introduce the segmentation of private landlords based on their business models.
The segments are based on specific criteria including portfolio size, rental income, type of tenants, or investment strategy, and the government says the goal of this analysis is to better understand and target landlords’ varying needs and behaviours.
The whole exercise is very lengthy and a link to the full document is at the bottom of this extract.
Six distinct types of private landlord
The landlord population of the private rented sector is known to be dominated by landlords with only a small number of properties, with around 45% of landlords in the EPLS sample owning only one property (representing 21% of tenancies), and only 17% owning five or more properties (representing 49% of tenancies).
This research identified six distinct types of landlords within the EPLS sample and assessed how common each landlord profile was.
Small landlords (83%):
The largest group, comprising 31% of private landlords in the EPLS sample, were small-scale retired landlords who typically owned modest portfolios (e.g. 1-2 properties) with low loan value to property value ratios. These landlords were generally retired and viewed their portfolio as an investment to supplement retirement funds.
Small-scale short-term investor landlordsmade up 27% of the sample, treated property as an investment for either rental income or capital growth, and to a lesser degree, as an investment as a contribution to their pension. These landlords often had Buy-to-Let mortgages.
Small-scale investor for retirement landlordsaccounted for 24% of the sample. They were similar to small-scale short-term investor landlords in terms of portfolio size and use of Buy-to-Let mortgages. However, they didn’t see their role as investment for rental income or capital growth, but primarily as an investment for retirement.
Moderate to large landlords (10%):
Moderate-scale business and investor landlords, representing 4% of the sample, viewed their role as both an investment and as a business. They derived a significant proportion of their income from rent and were likely to hold membership in property organisations.
Large-scale business landlords, constituting 5% of the sample were similar to moderate-scale business and investor landlords, though tended to have larger portfolio sizes. However, they saw their role as a business but not as an investment. These landlords were the most likely group to say they would let to people on housing support.
Corporate landlords (7%):
Finally, corporate landlords, who made up 7% of private landlords in the sample, reported they rented out property as part of a company, rather than as an individual or group of individuals.
Together, these segments illustrate the diversity of landlord types within the rental market. The segmentations are a representation of the EPLS responding sample, rather than the overall landlord landscape. The EPLS landlord sample is made up of landlords who are registered with one of the three government-backed Tenancy Deposit Protection (TDP) schemes.
It is not known exactly what proportion of the private rented sector is covered by the TDP schemes. Based on data from the English Housing Survey (EHS) in 2022-23, between 65% and 73% of households in the private rented sector are covered by a TDP scheme.
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The full segmentation analysis can be found here: https://www.gov.uk/government/publications/english-private-landlord-survey-segmenting-the-business-models-of-private-landlords/main-report-english-private-landlord-survey-segmenting-the-business-models-of-private-landlords
