Stats to influence your buy to let business

The mortgage market is certainly no stranger to data, market research and indices. From understanding our landlord clients to providing an overview of market conditions, data is vital from both internal and external business perspective.

Over the past few weeks we’ve seen a raft of statistical data emerge from the buy to let sector, notably around profitability and yield.

The latest Q3 Landlord Panel research from BVA BDRC outlined that profitability remains largely unchanged in Q3, with 84% of landlords currently making a profit from their lettings activity. It continues to be the case that only a very small minority of active landlords (3%) are making a financial loss of any kind. The tipping point for becoming a professional landlord is typically around 11 properties which is the threshold at which over half of landlord respondents begin to derive a full time living from their letting activity.

BTL rates for all types of landlords

It also outlined that the average rental yield achieved edged up to 5.6%, up marginally from the nine-year low recorded in Q2 2019. There was suggested to be a 1% differential between the highest yield generating regions, the East Midlands and Yorkshire & Humber at 6.1%, and the lowest, Central London at 5.1%. Remarkably, it remained the case that over one in four landlords don’t even know what their average rental yield is.

Additional research from Rightmove for Q3 2019 showed record asking rents in all but two regions, as fewer new rental properties came onto the market. Asking rents outside London were reported to be at a peak of £828 per calendar month, the biggest quarterly jump in rents at this time of year since 2015. In London, rents stood at a record of £2,104 per calendar month, the biggest quarterly jump at this time of year since Rightmove started recording this data. These jumps have led to an annual rate of growth of 3.2% outside London, the highest since 2016, and an annual rate of 5.6% in London.

So what does this data actually mean for landlords and the intermediary market?

Most of this is self-explanatory but it doesn’t harm to underline that despite the well-publicised challenges facing landlords, the vast majority are still profiting from the buy to let sector, even those who don’t even know what their average yield is!

Looking forward, landlords will need even more support from lenders and intermediaries to maximise profitability as associated costs will escalate if portfolios are not being carefully managed. This particular penny is dropping for landlords, and one specific statistic that I hope, and expect to see in 2020, is the rise in the number of landlords seeking intermediary advice. Whilst this might not win stat of the decade, it certainly bodes well for intermediary firms who are looking to bolster their buy to let business.

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