Landlords who rent out just one property are struggling with voids and rent arrears, says market research firm BDRC Continental.
Its landlords panel says that the proportion of small landlords making a loss has doubled from 8% in Q1 2012 to 16% in Q2.
By contrast, those with more properties fare far better: 40% of those with 5-10 properties, 69% of those with 11-19 properties and 68% with 20-plus in their portfolios are making a profitable full-time living from letting.
Arrears have also become more of a problem, while voids are a concern for single-property landlords: almost one in ten have experienced voids in the last three months, and these lasted an average of 69 days.
A future concern for all private landlords is that the latest data points to a third consecutive decline in perceived tenant demand, with a continued shift from ‘increasing’ demand to ‘no change’.
At present, however, more landlords are experiencing demand than seeing it decline (net position +27%) but this emerging trend could suggest more trouble on the horizon.
Commenting on the latest findings, Mark Long, director for BDRC Continental, said: “It is a tough time to be a private landlord if you have only one property in your portfolio. Over the last quarter, profitability has clearly taken a dive.
“Regardless of their size, there is no question the private rental sector relies on private landlords and, whilst a third may aspire to increase their property portfolio, they will only be able to achieve this goal and add to Britain’s privately rented housing stock if they can make a profit from that one property.”
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Comments
Once class C exemptions are gone, I cannot see how landlords with rental arrears and voids can possibly survive. There seems to be a total lack of recognition that property costs money, its not all profit and landlords can operate at a loss and need other income to support their long-term objectives.
There are also adequate laws on health & safety issues, etc that can be enforced, if necessary, without having to waste time in duplicating existing requirements or creating licensing schemes just to make extra money for local councils. Councils already know who the landlords are through the C exemption. Any landlord not claiming ecemption in this economic climate would have to be insane, in which case they would not be bothered about any sanctions...
The government "initiatives" I have heard about lately seem totally unreal. These include fixing rents so tenants can afford to pay. Why not take that to its logical conclusion and fix all prices/costs for goods and services so that people can afford to shop, and not just pick on one business sector.
Does the green deal only apply to landlords and not private home owners? If so, it is discrimination.
Coupled with the removal of class C exemptions, I think this government is showing a singular lack of understanding of this market sector. If only this government's disciples would show half as much zeal in sorting out bankers.
With all these proposed changes, I feel I would be better off and more pampered as a tenant than as a house owner.
Anyone want to buy my property at a reasonable price?