"Seven Ages of a Landlords"

The Lifecycle of the average residential property investor

March 2007: Landlord Mortgages, the UK’s largest specialist buy-to-let broker, has today revealed the ‘lifecycle’ of the average buy-to-let investor in the UK. The research which has been compiled using data from a selection of Landlord Mortgages customers shows the following development from ‘initial concept’ to eventual ‘retirement’:

Lifecycle of the Average Landlord:

1. ‘Thinker’ - This person has yet to invest in B2L but is considering their options and the viability of this type of investment.

2. ‘Researcher’ - The consumer has decided to purchase a B2L property and is actively gathering research on mortgage rates, potential properties and target tenants. 92%* of potential landlords do not get past this stage.

3. ‘Proud Owner’ – The landlord has purchased their first property and is basking in the afterglow of becoming a buy-to-let investor. 77% of landlords never purchase more than one property*.

4. ‘Fledging Tycoon’ – The landlord has found owning one property a satisfying experience and decides to add to their investments so that they can become a ‘proper property’ investor.

5. ‘Bulk Buyer’ – The landlord has grown considerably in confidence and is now able to purchase several properties at once without wincing.

6. ‘Professional Landlord’ – The landlord owns a portfolio of properties – sufficient to be a landlord as their full time employment. Indeed, they now generally borrow using a portfolio agreement and are highly geared as well as financially savvy.

7. ‘Just ticking along’ – The landlord has retired or is nearing retirement and while they can’t actually sell many properties due to capital gains tax liability, they are not necessarily looking to increase their portfolio. Indeed, they may even have moved abroad or be living off the rental income.

Lee Grandin, Managing Director of Landlord Mortgages, comments:

“It was fascinating to see that there is a ‘life-cycle’ that the majority of residential property investors follow. The first stage involves the consumer considering the initial concept and then actively researching the topic. This is when over 90% of potential landlords fall by the wayside and decide to choose other less taxing types of investment.

“Of those consumers who buy a buy-to-let property, the majority (77%) never choose expand their portfolio with additional purchases. However, the more serious investors proceed through to becoming a ‘fledging tycoon’, ‘bulk buyer’ and eventually a ‘professional landlord’.

“All landlords eventually reach a stage when their investment portfolio is ‘just ticking along’. As buy-to-let investing only officially ‘started’ just over ten years ago, there are a relatively small number of landlords who fit into this category.

“However as this number grows, we will see an increasing number of landlords being forced to hold onto properties they may wish to sell in order to avoid huge capital gains tax bills. It will be interesting to see if the Government makes some sort of provision or concession to help these landlords ‘release’ these properties back into the market.” Notes to Editors:

* = Figures are compiled using mortgage enquiry levels and the subsequent take up of these offers. Follow up calls are performed to ascertain the reason behind any failure to proceed with the mortgage process.