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Property pays: landlords now earning twice the current UK average wage

June 9, 2014Article by Ray Withers

Property pays. I’ve always maintained this, but don’t just take my word for it. A new report from market research experts, the BM Solutions / BDRC Continental Landlord Panel, has revealed a typical landlord can now expect a gross annual income of almost £60,000. That’s twice the current UK average wage of £27,174.

The best thing is you don’t have to go work 9 to 5 in someone else’s office to make it either. Instead, your salary as a landlord is passive income at best, meaning you can sit on a beach with a cocktail in your hand and still be making your money. At worst you might have to put in a few hours and a bit of effort here and there, but to suit your own schedule. In a nutshell, you are your own boss.

Build a million pound portfolio from small investments

The typical portfolio, according to the report, is estimated at £1.2 million and consists of between eight and nine properties which are estimated to be worth £140,000 each. So you don’t have to be running million pound properties to build a million pound portfolio.

You don’t have to be cash rich either, as two thirds of landlords rely on buy-to-let mortgages. Not surprisingly, 78 per cent of landlords view property as their pension and 64 per cent consider themselves to be “professional landlords” due to the great income property provides. According to the report average rental yields in the UK have increased 0.2 per cent over the last quarter to 6.2 per cent and voids were down by 3 per cent over the quarter.

That said, one in three told the report they do not have an exit strategy, financial or business plan in place. Tsk tsk! I covered this area is my recent blog Join the 60% of landlords set to expand their portfolios in 2014 with our three golden property investment rules after reading a report that only one in five investors complete their due diligence and one in ten leave their investments to “luck.”

Yields up and voids down

The report also shows average UK rental yields have increased 0.2 per cent over the last quarter to 6.2 per cent and voids were down by 3 per cent over the quarter. The majority of landlords (88 per cent) cover the impact of voids from income from their other properties – although investors with just one property are still likely to use money from their “day job” to cover the loss.

With such excellent market conditions, it’s no wonder more and more investors with just one or two properties, have started to expand their portfolios. We are seeing an increasing number of our clients leave their day jobs behind, because their property portfolios are performing so well they’ve been able to take that step and become professional property investors.

Senior Boots boss quits job to replace income with property

Former Boots the Chemist boss, Cathy Colston, has recently been in the press for quitting her senior role as manager of the group’s pharmacies after she replaced her income through her property portfolio in just four years. Specialising in HMOs, Cathy now owns a dozen properties, let on average to six shares per property.

She told us: “It was challenging but I leant a lot, particularly about the importance of the quality of the property and how much that matters to tenants”, explaining that she took time out after quitting her job to “learn, read and study the housing market.”

Cathy’s goal was to generate as much income as possible right away and also see her through retirement. She chose HMOs especially for the simple maths – the more tenants per property, the higher the income the property delivers – but offers the same advice to all investors, no matter what type of property you choose, or how large or small your portfolio. It’s good advice and I covered some of these pointers in my earlier blog.

Cathy’s top tips

  1. Be clear on your strategy – are you investing for income, for growth, or for both?
  2. Work out your available funds and research buy-to-let mortgages.
  3. Decide how hands-on or hands-off you want to be and appoint the relevant professionals accordingly.
  4. Research your location, understand your tenant market and any planning requirements you might need.
  5. Pressure test your investments against higher interest rates to ensure your yield stays as high as it looks from the start.
  6. Identify opportunities to add value to your investments, from property improvements to refinancing.
  7. Most importantly (and this is where Cathy is a woman after my own heart) … have a plan! What are your going to do, where, how and what is your key driver and exit strategy?

Become your own boss with help from Property Frontiers

Of course, if you need any help with any of these points, we at Property Frontiers are here to help you every step of the way. From a good old chat about what you want to achieve from your portfolio and how we can help you achieve it (planning!); through to already completing all the due diligence on the properties, locations and investment details we offer (although this isn’t an excuse for you to do none of your own!); up to helping you manage your investment so it runs as smoothly as possible for you, with as little time from your side as possible … we can help you with all of this!

So get in touch on +44 1865 202 700 to find out more about our excellent UK buy-to-let investments in leading cities including London, Birmingham, Bradford, Manchester and Liverpool, offering low entry prices, higher than average yields, non-status developer finance and guaranteed income from day one.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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