Buy-to-let is prime source of property for rental market

Nearly 60% of all properties coming to the rental market are buy-to-let investments, but over a quarter of the supply still belongs to landlords letting their own homes, says Association of Residential Letting Agents.
With just over one in ten properties being put on the market by corporate landlords.

Regardless of the source of the property, the average length of the tenancies is 15 months and the majority of them are arranged as Assured Shorthold Tenancies.

It was the introduction of this type of tenancy that provided the impetus for the whole concept of buy-to-let.

However, properties with rental values of more than £25,000 a year fall outside the scope of the Assured Shorthold.

This boosts the number of non-AST tenancies to 11% of all tenancies arranged.

A sample of more than 500 member firms of the ARLA, detailed the sources of rental property and the types and lengths of tenancies as a part of the programme of regular surveys of the private rented sector and the buy-to-let market.

These surveys, the largest and most frequent of their kind, are supported by the ARLA Panel of Mortgage Lenders, Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and The Mortgage Business.

Research shows buy-to-let investors are responsible for introducing 54.1% of the rental stock now coming to the market in prime Central London.

This figure rises to 59% throughout the rest of the country.

Landlords renting their own homes account for 26.7% of the prime Central London market.

The proportion of these homeowner landlords rises to 28% in the rest of the South East and 25.7% elsewhere.

Surprisingly, only about 1% of all properties introduced to the rental market is believed to have been inherited.

At 17% of all sources of housing stock for the rental market, corporate landlords are twice as active in prime central london. Elsewhere, they are responsible for an average of only 8.5% of the stock

Adrian Turner, chief executive at ARLA, says: "Traditionally, a high proportion of homes to rent in the middle market have been supplied by landlords moving away from home, many to work overseas.

Despite the different sources of rental stock from buy-to-let investors and the activities of corporate landlords, these homeowner-landlords are continuing to play a significant role in the success of the modern private rented sector."

The ARLA research shows that, although the initial average length of a tenancy is nine months, tenants extend these tenancies to stay on for an average of 15 months.

More than three-quarters of all tenancies last for between 10 and 18 months

The average continuous stays were 16.7 months in prime Central London, 15.1 months in the South-East and 13.5 months in the rest of the UK.

The highest proportion of tenants, 44.2%, stayed in the same property for between 13 and 18 months.

The longest stays were found in the South East, where nearly half, 48.6%, were for 13 to 18 months and 14% stayed on for between 19 and 24 months.

The longest stays however are in prime Central London. There, 44.8% of all tenants stayed in the same property for between 13 and 18 months. A further quarter stayed for between 19 and 24 months.

Turner adds: "This totally confounds the perception that tenancies in the private rented sector are short term.

"The vast majority are arranged for at least a year and tenants very frequently extend their stay."