15/12/2004

Topline results from a new survey commissioned by the Council of Mortgage Lenders of over 1,300 buy-to-let mortgage borrowers sheds new light on the profile and motivations of these private landlords. It shows that two thirds have already been landlords for more than three years, three quarters own more than one property, and that 86% expect to maintain or increase their buy-to-let portfolio in the next 12 months.

The survey sought to establish what might cause buy-to-let landlords to increase or decrease their level of property holdings. The main factors that would prompt landlords to decrease their buy-to-let porfolios were rents being insufficient to cover the mortgage (cited by 49%) and rising interest rates (cited by 47%).

Stagnating or falling prices were not seen as a significant deterrent, being respectively cited by only 6% and 14% of landlords. The main factors that would encourage buy-to-let landlords to expand their portfolio were stable, low interest rates (cited by 56%), steady or rising house prices (46%) and good rental yields (44%).

In addition to buy-to-let mortgages, the survey asked landlords what other sources of finance they had used to acquire their properties. Savings were the most popular additional source of finance, cited by 58% of landlords. 43% had remortgaged their portfolio to free up funds for acquisitions, while 33% had remortgaged their home. 17% had used house sale proceeds and 16% had used an inheritance or other windfall, while 14% had taken a bank loan.

When asked what they planned to do over the next 12 months, 38% of landlords said they planned to increase their portfolio and 48% said they planned to maintain their current level. Only 5% said they planned to decrease their buy-to-let holdings, 1% said they planned to leave the market and 8% did not know.

In terms of how long they expect to remain in the private rental market, almost two thirds (63%) anticipate being landlords for more than ten years. Another fifth (21%) expect to remain in the market for 6-10 years and 14% for 1-5 years.

The CML will be commissioning more detailed analysis of the survey data to help provide more detailed information to the market on the characteristics and motivations of buy-to-let landlords, and expects to publish this in the early part of 2005.

Commenting on the topline results, CML Head of Research Bob Pannell said: "Up to now, the future intentions of buy-to-let landlords have been the subject of much conjecture but little real evidence."

"The topline survey evidence sets down a clear marker that landlords themselves broadly expect to maintain or increase their holdings, have a long-term interest in rental property, and are unlikely to be spooked by the prospect of a slower market."