Understanding a Nation

of Small Landlords

 Napoleon would have to re-think. Britain is no longer a nation of shopkeepers
but a nation of small landlords. Believing this new breed to be little
understood and to be a better bellwether for the housing market than
homebuyers, Paragon Mortgages, the niche market Buy to Let lender, has
launched a quarterly survey of residential landlords today.

 Explaining the need for this new survey, the Paragon Mortgages Property
Investor Confidence Tracking Index, or PICT Index, John Heron, Managing
Director of Paragon Mortgages Ltd, said that in less than five years, some
six or seven billion pounds have been lent to landlords, against some 135,000
investment properties in the Buy to Let sector.

 "Increasingly we are becoming a nation of small landlords. These private
investor landlords are now an important part of the nation's economic and
social fabric. We need to understand this economic sector better and to be
able to gauge how private landlords react to the ups and downs of the
economy. We urgently need the data from this Paragon Mortgages Index," said
Heron.

 According to the inaugural Index sampled in June, over two thirds of all
private investment landlords with mortgages have created a small portfolio of
property. 37.7% have two or three properties, 13.4% have four or five, 9.3%
have between six and ten.One in ten landlords have build up substantial
portfolios of between eleven and fifty residential investment properties.
Over two thirds of all respondents, 68%, were aged between 36 and 55 and one
in eight is over 55.

 Although most landlords are relatively new to this form of investment, nearly
two thirds of the value of their investments now lie in investment property.
More than a third have been landlords for less than three years while one in
ten have become landlords over the last year.

 Only a minority, just 15%, of all residential landlords are in property
investment as their main business.

 The profile of residential landlords shows that the highest proportion of
`amateur' landlords, 37.4%, are within the socio-economic group C. This is
believed to stem from the fact that this is the group that includes small
business owners. They are entirely responsible for their own pension and
personal financial planning. The second largest group, the top managers and
professionals falling into socio-economic group A, represent 26% of
landlords. A further 12% are group B, the category generally used to describe
middle managers. Just under 12% fell into the C2 category, which also
encompasses owners of small construction businesses.

 Unsurprisingly, 35.4% of all landlords said they invested in property for the
rate of return and 27.6% because it represents a 'safe' investment. Other
reasons behind investing in property include: 'more of a hands-on investment'
at 7.1% and investing in property to house a student child at 4.5%.

 The Paragon PICT Index forecasts the likely net change in property investment
over the next twelve months. Residential landlords expect their portfolios to
grow by 7% in the next three months and 12% over a full year. Meanwhile,
nearly half, 45%, expect no change.

 However, the value of investment property holdings for most landlords is
relatively small, with an average value of £258,000. Nearly six out of ten
have portfolios valued at less than £250,000 and one in five hold portfolios
valued at between £250,000 and £500,000. Nearly 15% hold portfolios with
values of between £500,000 and £1 million and 6.7% have portfolios worth more
than £1 million.

 Commented John Heron: "Buy to Let has come to represent an important part of
middle England's savings and investments. These property investors will
represent a better bellwether for the state of the property market than home
owners as they can and do make rational investment decisions. Unlike
homebuyers, they are not dictated to by necessity, expediency or emotion."

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