Landlords need to be professional in the way they operate for the good of their tenants and the industry as a whole.
Private landlords operating in the UK fall into three main categories: part-time, full-time, and accidental.
Most part-time landlords operate their rental businesses whilst holding down a full-time job, many of them with just one property, but others have built-up small portfolios of buy-to-lets.
Most professionals start off part-time but progress to full-time when they have built-up a sizeable portfolio which generates enough income to support them and their families.
Accidental landlords are those who may have inherited a property and decide to let it out, or they let their own home due to personal circumstances, such as working abroad, and relocation, especially when their property is in negative equity or they have had difficulty selling at the price they expect.
Skill levels vary across the piece: as would be expected, the full-timers would be the most experienced and professional in the way they manage their properties, with part-timers varying between amateur and professional standard, and the accidental ones being in the main inexperienced and amateur.
It is thought that on average around 50% of all properties are let directly by the landlord, with the other 50% being handled by professional letting agents, but this proportion varies across the country.
According to recent research by the National Landlords Association, (NLA) part-time landlords now make up more than 70 per cent of the sector.
Typical part-time landlords, the research shows, have on average four properties and generate annual gross rental income of around £31,000.
However, gross income often quoted by the popular press gives a misleading impression of buy-to-let returns. At least a quarter of this income is spent on property or portfolio related maintenance costs, with other costs for insurance, marketing, legal fees, administration etc. Net yields come down considerably from gross yields, and in the short term private landlords don’t make a fortune, and especially when you take into account the work and hassle involved, it looks like they deserve every penny.
Research conducted by the NLA based on their Landlord Panel of 1092 online respondents shows that 27 per cent of landlords have been letting for less than five years, with 14 per cent letting for just 2 years.
One in five (21 per cent) landlords have been letting between six to 10 years, and just over half (52 per cent) have been letting for more than 10 years.
2013-14 has seen an upsurge in the buy-to-let market and a large influx of new landlords. More than four out of ten of these landlords have used buy-to-let finance to fund their lettings portfolio, and almost 40 per cent of all landlords agree that it’s getting easier to access buy-to-let mortgages.
These figures reflect the increase in buy-to-let lending last year, up 32 per cent to £20.7 billion based on the NLA research figures.
These findings underline the fact that a large proportion of landlords have only been in business for a relatively short period of time.
This raises concerns because the industry is already coming in for some bad press due to the antics of a significant but small minority of bad and inexperienced landlords.
Even seasoned landlords experience real problems when dealing with tenants from time to time, so it is vital for the long term good that anyone new to the industry is fully aware of their legal obligations and understands that being a landlord involves much more than simply taking out a mortgage and buying a property.
The National Landlords Association (NLA) is reminding all landlords of the importance of understanding their obligations and operating their businesses to a professional standard.
Carolyn Uphill, Chairman of the NLA, has said:
“Being a landlord can be very rewarding but it’s vital that anyone considering a move in to buy-to-let, or indeed looking to expand their portfolio, is thoroughly researched and aware of what it involves. A part-time landlord typically has a day job so it can be a very challenging task to keep on top of managing and maintaining homes for people whilst juggling the demands of daily life.