Survey explodes buy-to-let myths

It shows that two thirds have already been landlords for more than three years, three quarters own more than one property, and that 86% expect to maintain or increase their buy-to-let portfolio in the next 12 months.

The survey sought to establish what might cause buy-to-let landlords to increase or decrease their level of property holdings. The main factors that would prompt landlords to decrease their buy-to-let porfolios were rents being insufficient to cover the mortgage (cited by 49%) and rising interest rates (cited by 47%). Stagnating or falling prices were not seen as a significant deterrent, being respectively cited by only 6% and 14% of landlords. The main factors that would encourage buy-to-let landlords to expand their portfolio were stable, low interest rates (cited by 56%), steady or rising house prices (46%) and good rental yields (44%).

In addition to buy-to-let mortgages, the survey asked landlords what other sources of finance they had used to acquire their properties. Savings were the most popular additional source of finance, cited by 58% of landlords. 43% had remortgaged their portfolio to free up funds for acquisitions, while 33% had remortgaged their home. 17% had used house sale proceeds and 16% had used an inheritance or other windfall, while 14% had taken a bank loan.

When asked what they planned to do over the next 12 months, 38% of landlords said they planned to increase their portfolio and 48% said they planned to maintain their current level. Only 5% said they planned to decrease their buy-to-let holdings, 1% said they planned to leave the market and 8% did not know.

In terms of how long they expect to remain in the private rental market, almost two thirds (63%) anticipate being landlords for more than ten years. Another fifth (21%) expect to remain in the market for 6-10 years and 14% for 1-5 years.

The CML will be commissioning more detailed analysis of the survey data to help provide more detailed information to the market on the characteristics and motivations of buy-to-let landlords, and expects to publish this in the early part of 2005.

Commenting on the topline results, CML Head of Research Bob Pannell said: "Up to now, the future intentions of buy-to-let landlords have been the subject of much conjecture but little real evidence. The topline survey evidence sets down a clear marker that landlords themselves broadly expect to maintain or increase their holdings, have a long-term interest in rental property, and are unlikely to be spooked by the prospect of a slower market."