Why are landlords so bullish?

In the current down turn, with house prices crashing and debt and buy-to-let mortgage costs going through the roof.

It appears that us landlords are a pretty optomistic bunch.

According to market research agency BDRC 41% of the 508 landlords surveyed between December 2007 and March 2008 expressed optimism about Britain's private rental sector.

An even higher proportion (54%) thought residential property still had the potential to offer better growth than other forms of investment; 44% said that while letting wasn't currently their main source of income, they expected it to be in the future.


According to Money Week landlord's apparent lack of concern appears complacent. Rising interest rates have pushed rental profitability to its lowest level since the survey began. The average gross rent was £30,140 a year and the average portfolio size £697,670; so even rental yields before deductions averaged just 4.3% - well below the cost of borrowing.

So why the optomism?

The main reason appears to be that us landlords are actually a cautious lot. This means that the average buy-to-let position is still affordable. This is because the average buy-to-let loan is only £282,950 making the average loan to value (LTV)only 40.5%.

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Therefore despite the fact that variable buy-to-let mortgage rates have risen above 7%, our average buy-to-let investor will still have outgoings of no more than £20,000 against a gross income of £30,140 giving the average landlord a nice tidy £10,000 of income. That kind of residual income is a recipe for optomism in anyones eyes!


Are you optomistic or pessimistic - post your comments below