Landlords, Income Levels and Top Slicing
Newly released figures from specialist lender, Precise Mortgages, has revealed that 52 per cent of landlords use letting income to boost earnings from a full-time job.
The study found that even among landlords with bigger portfolios, many are still working full-time and have other earnings beyond letting income. Around 32 per cent of those with 11 to 19 properties say letting income supplements day job earnings while 18 per cent of those with 20-plus properties have other income in addition to rental earnings.
Across the market as a whole, one in three (33 per cent) landlords earn their living purely from their property portfolios, rising to 47 per cent among those with six to 10 properties. Around one in six (16 per cent) landlords plan to add more properties in the year ahead with 71 per cent funding purchases with a buy to let mortgage.
This represent an interesting breakdown and highlights why landlords need greater flexibility when it comes to their buy-to-let needs. Top slicing is one such example of how some lenders are looking to help more borrowers access suitable financing and optimise investment opportunities. Precise Mortgages recently made the move to accept top slicing on all eligible personal ownership, limited company, portfolio, HMO, holiday and student let applications. First-time buyers are excluded. This means that BTL borrowers will be able to use surplus portfolio or earned income to demonstrate that they could meet any financial stresses on their new property application, rather than through the rental income of that property alone.
Top slicing may not be the right solution for all landlords, but it does highlight how lenders are having to adjust their product ranges to cope with shifting landlord demands and challenging economic conditions. Will all lenders move in this direction? It remains to be seen, but the wider variety and greater depth of responsible finance options that are available to landlords and intermediaries, the better it is for the housing market.