Private rented sector provides pensions

Robyn Hall

February 18, 2013

Of those single property and portfolio landlords surveyed, 84% viewed their rental property as a supplementary income to their pension with six out of 10 actively planning to live off the rental income at retirement.

Phil Rickards, head of sales at BM Solutions, said; “The private rental sector remains an alternative source of long term investment for landlords for later life and this does not look like it is set to change.

“Whilst rental yields have dipped slightly they still remain at the high levels we have seen over the past few years.”

A further four in 10 of those who agreed that their property is their pension intended to make a decision dependent on the state of the property market once they reached retirement.

Very few landlords planned to sell all properties in their portfolio when they reached retirement.

Findings from the survey showed that rental yields fell by 0.5% to 6.2% in the final quarter of the year compared to the average rental yield of 6.7% in quarter three 2012 and 6.2% in quarters two and one last year.

The strongest performing region was East Midlands with landlords on average achieving a return of 7.1% while Yorkshire and Humberside reported the lowest rental yield of 4.6%.

In the final quarter of 2012 on average 2.4 tenants were in arrears which was a fall from 3.3 tenants in quarter three of that year.

Whilst the proportion of landlords experiencing rental arrears has fallen to the lowest level since quarter two 2010 (41%) the average amount owed per tenant was £2,613, up £247 since the previous quarter.

Data relating to void periods also moved in a positive direction.

Strong and consistent tenant demand has seen void periods fall to their lowest level for over 12 months.

Last year only 33% of landlords reported void periods in quarter 4 which was a 4% decrease on quarter three.

The average duration of a void period has fallen consistently over the past year to an average of 60 days.

The greatest proportion of void periods was seen in the North East (53%) and the lowest proportion in Central London (20%).

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