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17th February 2012

Landlords - Confidence and Uncertainty

Rents have risen over the past year but still some Landlords - including those with portfolios of 20 or more properties are feeling the pinch and up to 8% reported a loss in the final quarter of 2011.

The latest findings from a quarterly Landlord Panel reveals the biggest rise in the number of portfolio landlords making a loss since the Landlords Panel was begun by BDRC Continental in 2006.

At the same time, while portfolio landlords reaped the highest rental yields at 7%, average rental yields for all landlords fell in Q4 2011, down to 5.9% from 6.7% in the previous quarter.

In the last quarter of 2011, rental yields for all landlords fell to their lowest level in the year. This was despite almost half (46%) of landlords having increased rents for tenants in the previous 12 months and one in three (34%) planning to do so during the first half of 2012.

However, BDRC Continental’s research reveals that landlord sentiment remains upbeat, with 80% saying they feel positive about being a landlord. 

This may be because the number of landlords reporting a recent void period in their property fell from 41% in the third quarter of 2011 to 36% in the fourth quarter.

So, what is going on? Lower voids and higher rents are only part of the story - the other darker part is where the losses are - arrears and half of all landlords have experienced this issue - and it is a major concern for all.

In a difficult economy having a larger portfolio brings greater exposure to that risk - and those are the landlords feeling the impact of increasing costs and declining profitability.

But, there are ways of reducing exposure to this risk - using a reputable letting agent is the first place to start - one where all tenants are thoroughly vetted with a good loettings history. The next consideration would be rent guarantee insurance - products such as the MAC Promise will pay out on arrears and cover the costs of evicting - providing the tenants are properly referenced in the first place.

Times are hard - but with the right help and advice times dont have to be disasterous - give us a call today to talk about your portfolio and the ways that we might be able to help you!