BDRC director Mark Long outlined the issues as he presented his "State of the Nation" review of the Buy-to-Let (BTL) and private rental market in credit-crunched Britain at this week’s British Property Federation’s Residential Conference.
Since October 2006 this independent research has measured the private rental market by surveying the opinions, attitudes and expectations of more than 500 British landlords every quarter.
Published in the Landlords Panel report, the latest wave of the research, covering the last quarter of 2008 has returned statistics never seen before and presents a picture of a market characterised by over-supply, reduced rental incomes and less hope of securing finance:
• 7% of private landlords had been involved in some repossession activity by a lender;
• 4% had missed at least one mortgage payment in 2008.
And in terms of their expectations for 2009:
• 8% are very likely or quite likely to miss a mortgage payment in the
next three months;
• 2% believed repossession proceedings against them were imminent.
Portfolio size is the key to survival in this market.
The report distinguishes between the struggling "amateur" private landlords with between one and four properties and "professional" landlords with 20 or more who are enjoying higher profits in the current climate.
Not only are 100% of professional landlords making a profit, but they are also taking advantage of falling property prices, repossessions, auctions and sale and rent back schemes to add to their portfolios.
Amateur landlords by comparison are much less likely to be making a profit – 15% with one property and 7% with two to four properties say they are making a loss at the moment.
Mark Long said: “The credit crunch has polarised the private rental market. Whilst professional landlords are able to
cover their costs and expand their portfolios, the amateur landlords, many of whom ‘fell’ into letting by accident, are really starting to feel the pinch.
"Our research shows that thousands of private landlords expect to fall behind on
mortgage payments in the next three months and a considerable proportion are likely to face repossession on one of their properties.”
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