8 Apr

Many buy-to-let investors 'failing to track returns'

Many buy-to-let investors 'failing to track returns'

Many buy-to-let investors in the UK are not tracking the returns offered by their property, claims new research.

A study from Platinum Property Partners concluded that 23 per cent of residential property landlords do not measure returns on their investments - meaning many are in the dark about the quality of their property portfolios.

In many cases, there was considerable confusion for landlords in how to track their buy-to-let finances and this could lead to an inaccurate picture of the performance of their investments.

According to the research, landlords of Houses in Multiple Occupation (HMOs) for young professionals and key workers were the most likely to keep records of returns, but those operating in the holiday homes sector were least likely to measure performance.

Platinum Property Partners found that the majority of buy-to-let landlords also fail to fully understand key financial terminology, with only 24 per cent being able to correctly define 'return on investment'.

There was also confusion about how to work out returns and profit. The most common method to work out a gross yield was rental income as a percentage of the property purchase price and this was used by 38 per cent of buy-to-let landlords.

Yet, 28 per cent calculated gross yield as rental income as a percentage of the current market value of a property, including any refurbishment costs.

Steve Bolton, chairman of Platinum Property Partners, explained: "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."ADNFCR-1222-ID-801782682-ADNFCR

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