Buy to Let? Which Tribe Do You Belong To?

A recent Association of Residential Lettings Agents (ARLA) report has revealed that getting on for a third of its members believe landlords are snapping up properties in greater numbers.

This is the highest reading for nearly seven years. More than 29,000 became landlords for the first time last year – an increase of more than three quarters since 2010.

It’s not hard to see the appeal. Pensions, stocks and shares and similar financial investments seem volatile or offer low returns, tumbling mortgage rates are making property buying more attractive, and more people are staying in the private rented for the sector for longer, making it easier than ever to find tenants.

What’s more, this strong demand for rental accommodation looks set to continue, and mortgage rates are expected to remain low.

The changing landscape means a greater diversity of people aiming to take advantage of the buy to let boom.

Who is contributing to this increase?

This shifting profile of entrepreneurs led the Sunday Times to identify different “tribes” of landlords in an in-depth piece on buy-to-let recently.

These included “Grandlords”, or older landlords who invest to boost flagging pensions. (The cost of being retired has jumped by over a quarter since December 2009.)

Then there are the “Mumtrepreneurs”. Property investment allows parents to stay at home with young children while providing mental stimulation and bringing in a much-needed income. It also gives a family a tangible asset which can, later on, be used to fund school or university fees if necessary.

Why the spread?

Many people get into property renting as a hobby. Many landlords will make an effort to develop their properties in order to make them as profitable as possible, this could be from adding extensions or converting the loft, to adding custom motorised blinds to add convenience for tenants.

Many landlords these days are clever in adding emphasis on other features of properties, rather than focusing solely on the number of rooms it has.

Outdoor space is becoming more and more important to tenants, with 78% of renters saying they would rather a property with more exterior features such as a garden.

Landlords have seen a gap in the market for this and have made more efforts to invest in the outdoor areas too. Again adding features that will make properties more desirable like adding solar protection for house and home

The paper also highlights the “Second Steppers”, or those who upsize by renting out rather than selling their first home to fund a move to a bigger property.

The “Divide and Conquerors” are couples who use divorce settlements to put a deposit down on an investment property. Again, this group will feel the benefits of financial security and having a sellable asset.

Finally, expat entrepreneurs are increasingly buying property instead of hedge funds or pensions. This gives those living abroad a foothold in the British market, and the choice of moving back in, selling up or continuing to rent out on returning to the UK.

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