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Btl Investors Borrow An Average Of 73% Of The Purchase Price

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Buy to let investment is proving most fruitful for long term investors and landlords alike

Posted: 2:59 pm, 25th June 2007

Buy to Let investors borrow an average of 73% of the purchase price for their property investments, while a sizeable minority, one in eight, borrow less than half. Over 40% of these investors buy properties that are over 50 years old and less than a fifth buy new build. On average, investors expect to keep their properties for nearly 17 years.

These figures are published today in the quarterly ARLA Review & Index for Residential Investment. The Review is the largest independent survey of the private rented sector taken from 525 letting agents and 259 investment landlords during March.

This quarter's results are again seen as showing that the Buy to Let sector is dominated by the long term, mature investor. (my **** - even my mate "Dave" has a property portfolio nowadays!!)

Across the board, investment landlords report that tenants stay in their properties for an average of 18 months. This is irrespective of the length of the initial term agreed. 40% said that tenants stay for more than 18 months. A further fifth reported their tenants as staying for more than two years and only a third reported stays of less than a year.

Nearly a third of these tenants are aged between 23 and 30, a quarter is between 31 and 40 and nearly another third are over 40. One in eight is under 23.

"Increasingly, renting is seen as a long term option across all age groups," comments Adrian Turner, Chief Executive of ARLA. "We believe that this is a relection of a competitive rental market, increasingly high standards of housing that meet aspirations and a desire for flexibility."

The ARLA Index shows that the annual rates of return for a cash purchase of residential rental property average 11.18%. For geared investments the average is 21.68%. These returns include both rental income and capital appreciation.

There is only a marginal difference reported in the returns from flats and houses. The Review shows that the proportion of landlords with Houses in Multiple Occupation, HMOs, continues to fall. In the last quarter, the number of landlords reporting they had any HMOs at all fell from 54% to 49%.

Those leaving the HMO market cite bureaucracy, new rules, costs of alterations and licence fees as the prime reasons for their departure.

However, in the mainstream, it is clear that the vast majority of residential landlords are in Buy to Let for the long term. Nearly two thirds, 65%, claim they expect to hold on to their property investments for more than 10 years. Less than 2% see Buy to Let as a short term speculation in property by holding their investments for under two years.

Even if house prices were to fall, the great majority, 86%, of all investment landlords say they will not sell. 12% are unsure and a very small minority of 2.3% said that will sell in the event of falling house prices. Instead, nearly six out of ten respondents expect to buy more residential investment property over the next twelve months.

More than a third of these landlords are aged between 46 and 55. Almost a third more are between 36 and 45. The average age of all Buy to Let landlords responding to the ARLA survey this quarter is 46.

Source: http://www.landlordexpert.co.uk/index.php?news=860

Edited by studdymx

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