Amateur Landlords Struggling With Arrears

Posted on: 26 July 2012

Britain’s smallest private landlords – those renting out one property - are struggling as they feel the impact of voids and rent arrears.

The latest research from BDRC Continental’s independent Landlords’ Panel survey reveals the proportion making either a small or large loss has doubled from 8% in Q1 2012 to 16% in Q2.

Those with more properties fare far better: 40% of those with 5-10 properties, 69% of those with 11-19 properties and 68% with 20+ in their portfolios make a profitable full time living from letting.

In Q1 the report identified a fall in rental arrears for the first time in a year; by Q2 the trend had reversed bouncing back to 49% from 45%.

Almost one in ten single property landlords (9%) experienced voids in the last three months that lasted just over two months or an average of 69 days. A future concern for all private landlords is that the Q2 data points to a third consecutive decline in perceived tenant demand with a continued shift from ‘increasing’ demand to ‘no change’.

At present more landlords are experiencing demand than seeing it decline (net position +27%) but this emerging trend could suggest more trouble on the horizon.

Mark Long, director for BDRC Continental, said: “It is a tough time to be a private landlord if you have only one property in your portfolio. Over the last quarter profitability has clearly taken a dive.

"Regardless of their size there is no question the private rental sector relies on private landlords and whilst a third may aspire to increase their property portfolio, they will only be able to achieve this goal and add to Britain’s privately rented housing stock if they can make a profit from that one property.”

David Sansome, Managing Director at Sansomd & George said: “Whether landlords have one property or a large portfolio, they all need to ensure that their investments are being proactively managed.

This report doesn’t provide the information but it may be that many of the “one property” landlords referred to are “self-managing” their properties and are finding that the costs of doing so are much higher than they imagined. This can be particularly true when issues arise. In turn, their ability to reduce or remove void periods is significantly harder than via a professional letting agent.

I strongly recommend all landlords seek professional advice and support as the most cost effective route to successful investment.”

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