Currently, respondents have an average of 3.5 non-British tenants. The professional landlord (who owns a larger average portfolio) tends to have greater involvement with non-British tenants, with an average of 4.4, compared to the small-scale landlord who has an average of just 0.5 non-British tenants.
Over the past five years, landlords have seen rental demand from immigrants increase steadily. Six times more respondents claim to have experienced rises in demand from non-British tenants than those that have not.
Professional landlords in particular believe that demand from immigrants has increased, with 40 per cent reporting a rise compared with 27 per cent of small-scale landlords.
In terms of future changes in rental demand, 47 per cent of landlords expect to see demand from immigrants increase over the next few years. Again, professional landlords are more optimistic in this respect, with 23 per cent of respondents expecting rental demand from immigrants to rise significantly.
The majority of non-British tenants currently tend to be migrant workers rather than students, split almost equally between EU and non-EU countries. Asylum seekers represent only a very small percentage of tenants housed by private landlords.
John Heron, managing director of Paragon Mortgages, commented: “On the whole, landlords are optimistic that tenant demand will continue to rise over the next few years, and inward migration is a key contributory factor. Over the past decade migration into the UK has increased steadily from 314,000 in 1994 to 582,000 in 2004, and with further EU enlargement on the agenda it is likely to increase even further .”
For the most part, tenancies run smoothly, with the vast majority of residential landlords reporting no problems with non-British tenants. Of the difficulties encountered, most are attributable to communication/language problems, with difficulties over bank accounts, deposits and references mentioned in a small minority of cases.
Migrant tenants typically represent a stable, long term customer base for landlords. One in three plan to stay for between one and three years, while 15 per cent intend to stay ‘indefinitely’ or ‘permanently’. Just one in eight is expected to stay for less than a year.
John Heron added: “Individuals coming to the UK represent an increasingly reliable source of rental income for landlords and an important element in future rental demand.”
With regard to overall tenant demand, 71 per cent believe demand is currently stable, while 22 per cent say, in their view, it is either growing or booming. These figures tend to suggest, overall, tenant demand in general continues to be on the increase.
The survey results also show that the average landlord is becoming more experienced and is either maintaining or growing his or her current investment portfolio, in response to sustained demand from tenants.
90 per cent of landlords have been involved in the business for six years or more, and 36 per cent have 11 or more years’ experience. 5 per cent have over 20 years’ involvement in buy-to-let.
In comparison, one year ago just 80 per cent had six or more years’ experience and 27 per cent had been in the business for 11 years or more.
As for the future, landlords expect to see further gradual growth in the size of their buy-to-let portfolios. From the current level of 10.6 properties, they expect to grow the size of the average portfolio by 2.8 per cent to 10.9 properties by the end of 2006.
John Heron said: “For as long as the majority of landlords expect demand from tenants to rise, or at the least remain stable, they will continue to sustain their property investments. Many investor landlords are expecting to increase their property portfolios in 2006 but are not counting on any significant capital appreciation in their portfolios.
"At the same time, neither do they expect to see any fall in value. The consensus among landlords is that property values will remain broadly flat over the year, but with sustained levels of demand from tenants, buy-to-let remains an attractive investment option for the well-informed long-term investor.”
