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Rise In Buy-to-let-to-lifestyle By Standard Life Bank

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Here's an interesting bullish (in appearance) BTL press release from Standard Life, which I get my teeth into and try an tear apart, possibly with interesting results :huh:

Rise in Buy-To-Let-To-Lifestyle

"Our survey revealed that a quarter of all respondents are earning up to £200 more than their mortgage commitments every month, 27 per cent are earning between £200 and £500 extra, and 13 per cent are earning up to £1000 each month," said Andrew Boddie, Head of Marketing at Standard Life Bank.

Firstly note costs haven't been taken from these "earnings" figures so any respondent "earning" less than £100-200 or so a month is probably making a overall loss.

Next the figures;

25% earn £0-£199

27% earn £200-£500

13% earn £501-£1000

So what about the other 35%? All they all earning over £1000/month? Probably not :ph34r:

Unfortunately its not possible to work out the percentage making a loss from the article, but lets have a "guess".

Of those earning £0-£199... maybe half (or 12.5%) are making an overall loss after other costs/voids.

Of the unaccounted 35%... well given the number of properties owned (discussed below) and the fact 52% earn between £0 and £500, 13% earn between £501-£1000... so how about a guess of less than 13% earn more than £1000... which would leave at least 22% making a loss :o

Which means my guess is between 1/8 and 1/3rd of landlords are making an overall loss??? :blink:

As I said the above contains a few guesses.. but they seem reasonable to me given the data

On to number of properties owned, later in the article;

Number of properties owned by respondents in addition to their own home;

One property is 57%

Two properties is 23%

Three to five properties is 13%

Six to 10 properties is 4%

More than 10 properties is 3%

Now look at page 14 of ARLA Survey of Residential Landlords (June 2003)

Re-grouping to the same ranges as above, in June 2003, the number of people owning;

One property was 32.3%

Two properties was 23.1%

Three to five properties was 25.6%

Six to 10 properties 10.1%

More than 10 properties 9%

I haven't found an absolute figure for the number of landlords (for June 2003 or Jan 2006), just indications that the number of landlords has increased by over 50% annually over recent years.

So lets guessimate an there are 2.5 times more landlords today compared to June 2003, now we can work out the increases/decreases in ownership for one, two, three to five properties etc

For each BTL landlord owning one property in mid 2003, today there are ~4.4

For each BTL landlord owning two properties in mid 2003, today there are ~2.4

For each BTL landlord owning three to five properties in mid 2003, today there are ~1.2

Above more than five properties there has been little change

Note huge increase of the number of BTL's with just one property in the last few years :o ... prime fodder for struggling when rates rise or voids occur... could this mean my guess of upto 1/3rd of landlords are making an overall loss be right after all?


There have been a few documented guesses during this post, if you have data which means we could eliminate them.. please post it!

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Looking at Rise in Buy-To-Let-To-Lifestyle and in particular the bit I didn't look at much;

The survey, which questioned more than 500 landlords across the UK, revealed that 17 per cent of respondents used the money earned from their property to go travelling, 10 per cent used their earnings to reduce their working hours and work part-time, while 10 per cent used the money to retrain or set up their own business. However, the idea of Buy-to-Let-to-Lifestyle doesn't just cover big life changes - almost a quarter (23 per cent) said that their rental income had enabled them to renovate their own homes.

So 60% of landlords make a profit and use it to travel, reduce their working hours, retrain or set up their own business or renovate their own homes.

So what of the other 40%? Some make a profit and use it for other means not mentioned in the article... and the rest I presume are making a loss? :D

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Re-investing in BMVs to expand their portfolos? :huh:

Possibly, but I thought the normal procedure was to remortgage and use the equity.. which maybe a touch difficult if prices are stagnent or falling :rolleyes:

Whilst looking for more facts to back up my orginal post, I found Private Landlords Survey: English House Condition Survey 2001 by the ODPM.

At the top of page 5;

The survey suggests that it is not always easy to make money in the sector. Landlords of a third (34%) of privately rented properties felt that the rent was not high to cover all the costs they expected it to cover and/or provide a return.

Remember this survey was in 2001... interest rates started at 5.75% and dropped to 4% by the end of the year and house prices were half of todays valuations.

Would you rather pay;

- £5800 in interest on £100,000 @ 5.8% (average 2001 base rate + 1%)

- or £11000 in interest on £200,000 @ 5.5% (average base rate over past year + 1%)

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