What is a typical landlord?

What is a typical landlord?

I think we all know there is no such thing as a typical landlord - we all come from different backgrounds with differing aims and objectives, indeed many never intend to be landlords at all and just find themselves with an empty property for some reason. 

However, we frequently see surveys that try to summarise the key attributes that define a landlord - if only it was so easy, we could send them all a letter asking them to join the PDPLA!  The latest such survey has been commissioned by the Council of Mortgage Lenders (so not independent) and does not state how large the sample population was or how it was comprised. Whilst not ignoring this dubious authenticity, it does come up with a key finding that does ring true - most landlords see property rental as a part-time activity that supplements their income.  (We do hope they did not pay too much to work this out - but anyway, for more information do read the full article from the CML below).

"The modern rise of the private rented sector needs little introduction. It has been well chronicled that shifts in demographics and economic trends have greatly boosted the sector, which now houses about one in five households.

Recent estimates based on data from HM Revenue & Customs suggest that there are at least 1.75 million landlords in the UK, who collectively earned a net £14.2 billion in rental income last year. While a fair amount of research has been done on how the profile of tenants has changed, there is less data available on the changing profile of landlords. At the CML, we have noted with concern the lack of such research, since the circumstances and motivation of landlords can have a substantial impact on how policy changes feed through into the wider housing market.

Typically, the 'go to' source for publicly available data on the profile of landlords has been the Department for Communities and Local Government"s private landlord survey (PLS). This survey, which samples landlords and property managers in England, provides a snapshot of the composition, experience, and attitudes prevailing among those providing rented accommodation. However, the survey has not been repeated since 2010, which casts doubt over whether it still accurately reflects the profile of landlords.

Updating the survey

In order to understand what has changed since then, the CML partnered with BDRC and the London School of Economics to conduct a new landlord survey. The questionnaire contains some questions repeated from 2010 PLS, and some new questions to probe how landlords have responded to recent changes in the rental market. Surveys were conducted in early June 2016. Although landlords across the UK were sampled, this article will only present results for English landlords, so data is comparable to that of the 2010 PLS. Wherever possible, we have maintained the 2010 PLS definitions for various categories of landlords—ie, private individuals, companies, full-time and part-time landlords, etc.

The timing of our survey means that landlords were able to anticipate the potential impact of proposed tax changes affecting the sector, even though many of these measures have yet to come into effect. Future surveys would shed more light on the effects of these tax changes.

While this data makes for some interesting comparisons, we note that these two surveys do not follow the same cohort, and therefore we caution readers not to ascribe too much significance to small changes in any given category.

Finding One: As in 2010, the majority of landlords still consider property rental to be their part-time activity, and most manage their portfolios as private individuals.

  • In 2016, 87% of landlords sampled manage their portfolio as an individual or as a couple, roughly unchanged from the 89% reported in 2010. The proportion operating as a company or other group comprises 14%, roughly on par with the 11% reported in 2010.
  • Likewise, the vast majority of respondents in 2010 and 2016 (92% and 95% respectively) do not consider letting to be their main business or occupation.

Finding Two: While most landlords still own just one property, there is an apparent trend towards larger portfolios.

  • Between 2010 and 2016, the proportion of respondents who manage only one property fell from 78% to 63%. At the same time, the share managing two to four properties rose from 17% to 30%.
  • This could be due to the difference in the samples of the two surveys. However, the sharp contrast between the 2010 and 2016 data is likely to reflect to some degree an underlying increase in average portfolio size. Such a finding would be consistent with our data on the number of loans for buy-to-let house purchases, which hasincreased by about 19% a year since 2010.

Finding Three: Generally, rental receipts make up less than half of a landlord"s total income. However, evidence suggests that rent is increasingly becoming a significant income stream.

  • For about 90% of landlords, rental income is less than half of their total income, virtually unchanged since the 2010 survey.
  • However, the share receiving no rent (typically due to a property being unoccupied) has dropped substantially from 21% to 5% over the past six years. At the same time, the share receiving up to one-quarter of their income from rent has risen by about seven percentage points, and the share claiming between one-quarter to one-half of the income from rent has grown by 10 percentage points.
  • This apparent shift may be attributable to differences in sample sizes. However, if it reflects an underlying trend, this would be consistent with the apparent increase in portfolio sizes, as it is easy to see how owning a larger portfolio would allow a landlord to draw a bigger chunk of their income from rent.

To sum up, while it looks like the typical landlord is still an individual running a rental business on the side, there appears to have been a gradual expansion of these side businesses—which, given the rise in demand for rented accommodation, should come as no surprise.

Tax changes?

Now that we have looked at what has changed, is there anything we can say about what landlords see coming down the track? The final question in our survey asked landlords to describe, in their own words, how the changing environment would impact their lettings over the next decade. Although it is hard to summarise the wide range of responses we received, nearly 16% cited government policy or tax changes as relevant factors motivating future plans for their portfolio.

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Written & oral information and advice from the Portsmouth & District Private Landlord's Association is given in good faith, but no responsibility whatsoever is accepted by the Association or it's officers for the accuracy of it's information & advice nor shall the Association be held responsible for the consequences of reliance upon such information.

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