New research from the National Landlords Association (NLA) reveals that, for a huge majority of landlords, their decision to invest in residential property is not based on past house price increases and the expectation of further rises in the future.
In the largest survey of its kind, less than one in ten landlords (9%) said that rising prices were the 'main reason' for their decision to invest. 46% of them said that they were 'a consideration' while a similar proportion of 45% said that rising prices 'had no influence at all'.
The NLA's chairman, David Salusbury, comments: "Our new survey illustrates that landlords are not principally motivated by capital gain on the value of their properties, in the way that a speculative investor would be. What matters to landlords first and foremost is finding good tenants who will look after their properties, stay for a reasonably long period and, of course, pay their rent on time."
He continues: "For our landlords, owning and letting property is a long-term business proposition rather than a 'get-rich-quick' scheme where they can make a 'quick turn' on property values. Their principal motivation is to provide decent homes to people who are often among the most vulnerable members of the community. As such, their number one priority is not whether they are making a paper gain on the value of the property, but rather whether they are receiving sufficient rent to cover their finance and day-to-day running costs."
Asked whether they had been influenced by 'excitement' effect in the housing market (the so-called 'bandwagon effect'), only 7% of landlords admitted that this was the case, with a further 13% 'slightly agreeing'. Overall, 20% accepted that this was to some extent true, but well over twice that number (44%) denied that this was the case at all. A significant 14% strongly disagreed that landlords had jumped on the price 'bandwagon'.
David Salusbury continues: "The overriding message from this research is that serious landlords - as opposed to the speculators - are not driven by short-termist price considerations."
Landlords' desire to attract and retain good quality tenants who will stay for a reasonable length of time is borne out by the typical length of the tenancies they are able to secure.
On average, tenancies last 20 months, with almost 28% lasting two years or more. Of the 29% that last less than a one year, a significant proportion are student lets, with 42% of landlords reporting an average tenancy of less than one year saying that they let to students.
David Salusbury continues: "On average, NLA member landlords responding to our survey report that tenancies last 20 months, with a significant proportion of almost 28% saying that the typical tenancy lasts over two years. Inevitably, student tenancies tend to be for less than one year, which has the effect of reducing the average. If we stripped out student lets, the average length of a tenancy would be in excess of two years."
"From our experience, it is by being sensitive and responsive to tenants' needs, by treating them as customers, that landlords are able to get tenants to stay for quite a long time. In turn, most tenants respond positively to the landlord's efforts to provide quality accommodation by looking after the fixtures and fittings of the property and by keeping the rent current. It's a win-win situation."