The buy-to-let market in the UK is red hot at the moment, with experts predicting that it is only likely to get more competitive as a third of over-55s choose to use the freedom surrounding their pension money to invest in property. However, a new study has revealed that even as the appetite for investment grows across the UK, there is a lack of knowledge about how the sector works.
According to the findings of the study from Platinum Property Partners, one of the most worrying factors is that people are not able to accurately keep track of the financial state of their investment. It said as many as a quarter of landlords never check the return they are getting on their property.
The average income from the UK will fluctuate between five and six per cent, however, it's important to make sure that you are keeping track of this to make sure you know how well it is performing and if you need to act to change tactics.
According to the company, some 23 per cent of landlords are not tracking the income of their properties, which means there is £300 billion of investment in the sector going unmonitored with the owners not sure of how well their investment is performing.
The most likely to neglect to check how their portfolios are doing are those who have only one property, which makes up the vast majority of the sector at the current time. Among those landlords who own houses in multiple occupancy or have a large portfolio of homes for young professionals and students, 95 per cent are keeping track of the return on their investment.
Return on investment is seen as the most effective way to track the performance of property to let, but some 56 per cent of those surveyed didn't even know what this was when surveyed by Platinum Property Partners. Other terms such as gross yield didn't fare much better in the knowledge of landlords.
"The buy to let market has boomed in recent years as scores of new landlords enter the renting game in a bid to reap the rewards from rising property values and increased tenant demand. But buy to let is still largely in its infancy, and professionalism in the sector has yet to catch up. A staggering amount of capital investment is not being managed diligently or being treated like a business," said Steve Bolton, chairman of Platinum Property Partners.