Many buy-to-let landlords are not aware of the current health of their property portfolios, according to new research by Platinum Property Partners. Their survey of landlords found that nearly a quarter (23%) don’t measure the returns on their rented properties, leaving a staggering £300 billion worth of buy-to-let investment unmonitored.
Some types of landlords, however, are more on the ball than others. It was found that 95% of landlords in possession of Houses in Multiple Occupation (HMOs), rented to young professionals and key workers, were aware of the profitability of their buy-to-let investments to some extent. But landlords who rent holiday homes are less likely to monitor their portfolio, with just 67% keeping track of returns.
The survey asked landlords how they measure the performance of their portfolios. Return on Investment, which is considered the most effective way to measure the performance of investments, and Return on Equity, which is also considered a good measure, were used by only a fifth (21%) of buy-to-let investors.
More than half (56%) used an inferior method, which could result in less accurate profit calculations. Indeed, less than a quarter (24%) of landlords understood the term ‘Return on Investment.’ Just 8% were able to correctly define the term, and only 26% could properly define the term ‘Gross Yield.’