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 in the quarterly Review & Index for Residential Investment by the Association of Residential Letting Agents (ARLA). 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.
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.
Commented Adrian Turner, Chief Executive of ARLA, "Increasingly, renting is seen as a long term option across all age groups. We believe that this is a reflection 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.
