Money News
A new survey conducted on behalf of specialist buy-to-let lenders Paragon Mortgages and Mortgage Trust reveals the dynamics behind today's typical buy-to-let investor. The data shows the average investor has been a residential landlord for 10 years, is 49 years old and expects to remain in the buy-to-let sector for at least another 10 years.
The average landlord has 10.6 properties (worth £1.69 million), 76% of which are mortgaged, with an average LTV (loan to value ratio) of 50%. Mortgages are spread between an average of 2.4 lenders.
Tenant demand has strengthened over the past six months and is expected to continue to do so, leading landlords to grow their portfolios.
Asked about their principal motivations for investing in property, the most commonly cited reason was that landlords, not surprisingly, prefer property over any other form of investment. This was closely followed by: a contribution to their pension planning; and for the returns it generates.
The average LTV on buy-to-let portfolios is around 50%. Over 60% of investors have LTVs of between 26% and 75%, and only a very small percentage (1.1%) report LTVs of 86% or more.
In terms of servicing the debt, 62% of respondents receive rent covering more than 115% of their monthly mortgage payment, and the average proportion of mortgage payments covered by rent is 130%.
Finally, landlords were asked about tenant demand and their future investment intentions. Over 90% reported that rental demand is the same or stronger than it was six months ago.
Looking at the next six months, over one third (34.2%) expect tenant demand for rental property to increase, while only 7.7% are forecasting a decline. Not surprisingly, given such a surge in tenant demand, 44.6% of landlords said they planned to grow their portfolios over the coming 12 months, with only 7.5% planning to reduce their involvement.
A very small minority (1.9%) indicated that they planned to leave the market. The reasons given for this were varied, but the most common ones were retirement (11.0%) or to release capital (9.2%).
12 July 2006 © Moneyextra.com
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