Buy-to-let investors failing to do their homework

One in ten investors say they trusted to luck when entering the buy-to-let market

More than nine out of 10 buy-to-let property investors in the UK have no five year plan, according to research.

The report from buy-to-let specialists Platinum Property Partners shows that only half have a written business plan, even though the main objective of those investing is to secure retirement income.

The overall value of private rental property across the UK is now £1.25 trillion, with 1.9 million private property investors owning an average portfolio worth £657,726.

However, only one in five investors did a significant amount of research before proceeding. One in ten investors say they trusted to luck when entering the buy-to-let market, having done very little research at all. Nearly a fifth of investors have no idea of the value of their gross yield.

"Buy-to-let is the biggest single investment most people make other than their family home, yet people are not actively managing it," said Steve Bolton, Founder and Chairman of Platinum Property Partners. "When the scale of the sector is considered, the lack of financial understanding and planning is staggering. There are few other investments you’d be comfortable making without at least an idea of how it was going to work for you so the fact so many property investors are leaving their investment to chance is remarkable."

According to the research only three in ten buy-to-let investors deliberately set out to purchase a property, with the majority of investors becoming 'accidental landlords ';more than 40 per cent began simply because they had a property they could rent out.

The most common type of property owned by investors is a family-sized home (54 per cent), followed by a two bedroom flat or apartment (33 per cent). Only four per cent of investors own multiple occupancy homes.