TMW Rental Income Analysis Q4 2017 1
Gross Rental Income Analysis Q4 2017 - Methodology We asked landlords to self-select their annual gross rental income. This report outlines the results along with rental trends and future rental intentions. The basis for the analysis in this report is derived from the following question: Over the last 12 months, in which band is the gross rental income you receive from your residential letting portfolio? The average gross rental income earned in the last 12 months is,000, down by 1,000 from Q3. Trend 57 54 48 50 53 51 60 59 57 50 57 65 56 59 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Gross Rental Income Analysis Q4 2017 - Overall The average gross rental income generated in the last 12 months is,000, down by 1,000 since Q3, but stable year-on-year. Annual Gross Rental Income Average:,000 Landlords who borrow to fund their BTL portfolio continue to generate a higher gross rental income, achieving an average of 70k a year, which is 53% higher than that of unencumbered landlords ( 39k). 0-4,999 5,000-9,999 5% 11% Fewer landlords report they have put rents up in the last year, down by 7% to 32% in Q4. The proportion of landlords who intend to increase rents in the next 6 months has also fallen, down from 3 in 10 who intended to do so in Q3, to 25% in Q4. 10,000-19,999 20,000-49,999 16% 32% 50,000-74,999 11% 75,000-99,999 9% 7,436 32% 25% 100,000-149,999 6% Annual rental income per property Increased rents in last 12 months Plan to increase rents in next 6 months 150,000-199,999 200,000-249,999 250,000 or more 3% 2% 4%
Regions 8 of the 12 UK regions achieve a gross rental income above the national average. Standard UK Region The highest gross rental income is achieved by landlords operating in Central London, who generated 100k on average in the last year. Annual income is lowest in Scotland, the East of England and West Midlands, at around 50k on average. Landlords with properties in the London zones continue to see gross rental income increase, with annual income up 17k from Q3 in Zones 1 2 (to 107k), and up 11k in Zones 3 4 (to 88k). London (Central) London (Outer) South West Yorkshire & The Humber North West East Midlands 78 70 64 63 61 100 Spotlight on London South East (excl London) Wales 60 London Zone 1-2: 107,000 North East 55 London Zone 3-4: 88,000 West Midlands 51 East of England 50 Scotland 45
Rental trends & intentions 36% of landlords think that rents are rising in the areas they let properties, down 9% from Q3. Current trend in landlords areas (%) Similarly, the proportion that have put rents up across their own portfolio in the last year has also fallen, from 39% in Q3, to 32% in Q4. Rents are RISING 36 Landlords are also less likely to be planning a rent increase across their own portfolio in the next 6 months, with 1 in 4 now saying they intend to raise rents, compared to the 29% who said this in Q3. Regionally, those with property in London are most likely to think rents are falling (22%), to have put rents down across their own portfolio in the last year (16%), and to intend to put rents down in the next 6 months (11%). Rents are REDUCING No change Not sure 10 12 42 Across landlords portfolio in LAST 12 months (%) Across landlords portfolio in NEXT 6 months (%) Rents are RISING 32 Rents are RISING 25 Rents are REDUCING 7 Rents are REDUCING 5 No change 59 No change 63 Not sure 2 Not sure 8
Portfolio Property type (Landlords were also asked to self define the overall rental yield they currently receive from their letting portfolio - taking into account current rental income, current portfolio value, any mortgages, maintenance and other running costs) Flats - multi unit block HMO Detached house Terraced house Average Rental Yield (%) 6.0 6.7 6.6 6.4 Tenant type Average Rental Yield (%) Executive/company lets Migrant workers Retired Older singles White collar workers LHA Older couples Families with children Young singles Other benefit claimants Blue collar workers Students Young couples Portfolio size 6.4 6.3 6.2 6.1 6.1 6.0 5.8 5.7 6.7 Semi-detached house Flats individual units Bungalow 5.6 5.5 6.0 1 2-3 4-5 6-10 11-19 20+ 14k 30k 48k 72k 119k 183k
Financials Mortgaged BTL landlords continue to generate a gross rental income which is significantly higher than that of unencumbered landlords ( 70k vs. 32k). Landlords who are making a financial loss from their portfolio report the lowest annual gross rental income, at 27k on average. This is under half the amount achieved by those making a profit ( 61k). Those who operate as a self-employed landlord generate the highest gross rental income, averaging 98k per year, although this is down by 11k from Q3. BTL Borrowing BTL - Yes BTL - No 70 32 Profitability Employment Status Making a profit 61 Self-employed landlord Self-employed other 56 98 Breaking even 39 Full time employee 51 Making a loss 27 Retired 42 Part time employee 38