More than three quarters of all buy-to-let investors are investing for the long term shows a new survey of buy-to-let investors. Two thirds plan to retain properties for more than ten years and a fifth claim the average life expectancy of their property investment is over twenty years.

These figures come from a major survey conducted through the website of the Association of Residential Letting Agents, (ARLA). It ran for over three months and was conducted in conjunction with direct links to the mortgage lenders on the ARLA panel.

“This is arguably the most broad-based survey it is possible to conduct and we expect the results to be viewed with interest by government as well as financial institutions and investors,” said John Crossley, Chairman of ARLA, on the release of the survey results.

Highlights show that:

• A quarter (25.4%) of all respondents became buy-to-let landlords five years ago or more, before 1998.
• A third (33.5%) first invested between 1999 and 2001.
• Nearly a third (31.1%) have invested since the beginning of 2002.
• Two thirds (68.6%) of all respondents, regardless of the timing of their first acquisition, report their most recent purchase was made since 2002.
• Seven out of ten expect to make further acquisitions in the next twelve months. This demonstrates that experienced investors are still active in the buy-to-let market.
• More than three quarters of all buy-to-let investors are investing for the long term.
• Two thirds plan to retain their properties for more than ten years.
• A fifth (19%) expect to keep their property investments for more than 20 years.

The new figures suggest a significant lowering of the age of the typical buy-to-let investor, from around 50, when ARLA first launched buy-to-let in September 1996. Now, over a quarter (28.3%) of all respondents are aged between 25 and 35. The largest single age group (37%) is between 35 and 45. Less than a quarter (23.3%) are between 46 and 55, while 9.5% are over 56.

Regardless of age, a large proportion of these investors (62.4%) acquire property within a twenty mile radius of home but over 10% claim to make their investments more than 200 miles away. The majority (55%) own only one or two properties but a significant minority, nearly one in ten (9%) have portfolios of over ten properties. On average, a Buy to Let portfolio consists of 5.8 properties.

Mortgage facts:

• The average Loan to Value is 54%.
• More than half (51%) take out Interest Only mortgages.
• Not quite a third (33.2%) have Capital & Interest mortgages.
• 15.1% have a mixture of both.
• Fixed rates are the choice of 28.4%.
• Tracker mortgages are taken by 17.6%.
• Discount attracts 22.7%.
• Flexible 9.6%.
• Standard Variable Rates are paid by 21.8%.

Nearly two out of ten respondents said they never review their mortgages and a further three out of ten said they reviewed them irregularly. However, 28% carry out a review their mortgages a least once a year.

Savings are used to pay deposits on investment properties by nearly half the respondents (49%). Four out of ten (41%) claimed to fund deposits from equity released from other investment properties and only one in twenty (5%) said they sold stocks and shares to fund an acquisition.

More than a third claimed average net percentage returns of between 6% and 8%. This was the largest single group. 12.1% claimed net returns of less than 3% net and 22.7% said that their net returns are between 3% and 6%. At the upper end of the scale, 17.6% claimed net returns of between 9% and 12% and 13.2% claimed a net return of over 12%. All these figures take account of both income and expenditure.

To find buy-to-let properties, nearly two thirds (65.7%) of respondents use local letting agents, all the time (28.4%), sometimes (33.2%), or when operating outside home areas (4.1%). Seven out of ten (70%) said that when using a letting or management agent it is either important or very important that the agent should be a member of a regulatory organisation like ARLA.

Added John Crossley, “I would urge everyone interested in the buy-to-let sector to look at the full results of this unique survey. It can be found on the ARLA website, www.arla.co.uk.”