UK rental market risks supply drought as landlords mull 5-year break

The next five years may see the rental market in the UK facing supply drought as majority of residential landlords in London and elsewhere do not intend to buy or sell more properties to let within this period.

A new research on this market shows that 75 percent of the landlords is not planning change but of those who are, some 13 percent in London plan to buy more properties and 9 percent to sell. Council of Mortgage Lenders (CML) says this compares with the 8 percent planning to buy and 15 percent to reduce their portfolio outside of London.

A residential property wire service, Propertywire, reveals that the survey set out to gain an insight into how landlords are coping with changes in the lettings sector and how tax is affecting buy to let property owners.

“The research found that, in many ways, landlords with property in London were very similar to landlords in the rest of the UK. But the results of this survey suggest that London landlords tend to make different decisions about financing, managing and expanding their properties”, the wire service, says.

Compared to the rest of the UK, landlords with properties in London have higher disposable incomes, are more likely to be full time workers, and typically become landlords at a younger age.

In London, about 50 percent of landlords report at least £1,000 of monthly disposable income while, outside the capital, only one third report this level of income. London landlords are 27 percent more likely to be in full time employment, and 37 percent less likely to be retired than landlords in the rest of the country.

In London, landlords are about 25 percent less likely to start out as accidental landlords, that is  landlords who have inherited rental property or who are letting  dwellings because they cannot be sold, rather than through choice. They are also about 50 percent more likely to become landlords after moving in with a partner who also owns their own home.

The average age of first time landlords in London is 42, compared to 47 outside the capital and when it comes to types of property owned, London landlords are more likely to let out flats and less likely to be letting houses.

In London, 79 percent of landlords own flats to let, while 47 percent have houses of some type, including bungalows. In the rest of the country, just 40 percent of landlords rent flats, while 84 percent rent houses.

The distribution of property ownership among landlords in London is similar to the rest of the UK. Some 60 percent of those in London own a single property, while a further 20 percent own two properties – mirroring the distribution in the rest of the UK. Likewise, about 10 percent of landlords in London own five or more properties, similar to the rest of the UK.

Landlords in the capital are just as likely as those elsewhere to offer tenancies of more than 12 months. Almost 60 percent of UK landlords indicated that they would offer tenancies of longer than a year, with little variation across regions.