Hello Medway Property Investors,
I have been completing a benchmarking exercise over the past couple of weeks which included a piece of research on some trends within the private rental sector and came across some very interesting data on property portfolio sizes!
Benchmarking is an extremely helpful exercise for a number of reasons, but one is to see where you sit in comparison to others in order to assess where you should / could be as well as helping you to set goals. If you are ahead of the average, it certainly is a great position to be in and if you are slightly behind, then it is always worth looking into how you can move forward.
Before I dive into the specifics on property portfolio sizes, here are a few additional headlines from my research:
- 13% of landlords hold properties in a mixture of a limited company and individually, whilst just 6% hold properties within a limited company
- The average rental yield sits at 5.4% for the south east and has remained relatively flat since Q4 2014
- The average HMO yield is 7% (this is higher in the south east)
- Yield and value-adding are the top two factors cited by landlords when purchasing a new rental property
I was interested to see how the average UK portfolio currently sits at 7.8 properties with the south east slightly lower than this average at 6.3 properties.
If we look at average portfolio values and base this on a UK average property price (flats and terraced houses) of £206,605 this makes the average portfolio worth just over £1.6m. If we look at the average Medway property price (flats and terraced houses) of £200,223, the average portfolio is worth just over £1.25m.
I thought that the below was certainly interesting; with the most common portfolio size being 2-4 properties, closely followed by 5-10; accounting for 70% of all landlords.
This portfolio size is drastically reduced when compared to previous years, with a peak of 14.9 properties in 2014 followed by 12.6 properties in 2018. That is quite a dramatic drop, being a total average of seven properties or 47% per landlord since 2014!
I am shocked at this, but not surprised given the amount of new legislation that has been brought in along with the changes to Section 24 tax rules. It is interesting to see, however, how overall confidence is up despite the challenges brought about by the COVID-19 pandemic!
So, what are your plans for the coming year? Are you part of the 14% of landlords who are looking to purchase your next buy-to-let property within the coming 12 months, 20% looking to reduce their portfolio size or 55% of those looking to maintain their portfolio size?
With the current stamp duty holiday and record tenant demand, now is certainly a great time to look at expanding your portfolio. However, it is crucial to make sure that you do so correctly and with a long-term view.
With 20% of landlords looking to reduce their portfolio size and the average earning from a property sale being £82k, now is also an excellent time to find some great deals. However, you do need to look in the right places and act quickly so you don’t miss out!
I hope you found this article helpful. Property remains a solid long-term investment and if you are looking at expanding your portfolio or have any questions about your next property investment, then I will be more than happy to help. You can book a free 15-minute initial consultation by heading over to our booking page.