A recent study by The Mortgage Lender (TML) reveals a significant trend among Buy to Let (BTL) landlords, with a focus on expanding their property portfolios over the past and coming year. According to the research, 52% of residential BTL landlords have increased their portfolios in the last 12 months, with 25% adding a single property and 27% acquiring multiple properties.
This trend is set to continue, as over half of the BTL landlords are planning further expansion in the next year. Specifically, 26% aim to acquire one more property, while an equal percentage intend to purchase multiple properties. This expansionist mindset among landlords can be linked to their confidence in the market, with a notable 74% feeling optimistic about the residential property market for the upcoming year.
The research further delves into the reasons behind this surge in portfolio growth. The primary driver, cited by 31% of landlords, is the increased demand from tenants. Additionally, 25% reported expanding their holdings due to having spare capital to invest.
Landlords are not just increasing their number of properties, but also diversifying their investments. 21% have diversified across different types of properties, and another 21% have spread their investments across various UK regions. Moreover, 20% have sought properties with better Energy Performance Certificate (EPC) ratings.
Despite this growth, some landlords have taken the opposite approach, with 31% selling at least one property in the past year and 33% planning sales in the next year. The predominant reasons for these sales include concerns over re-mortgaging due to rising interest rates (35%) and apprehensions about falling house prices (28%). 23% have sold properties to reinvest in better opportunities.
Chris Kirby, Head of Key Accounts & Specialist Distribution at The Mortgage Lender, commented on the findings: “BTL plays an important role in the residential property market, ensuring a good supply of quality and well-maintained rental properties to meet consumer demand. Last year’s high inflation and interest rate environment saw unsettled confidence levels among prospective homebuyers, though for residential landlords our research shows they have not been as discouraged. Many are taking opportunities to grow their portfolios, and with rates reducing, average rents increasing and house price growth predicted, landlords have good reason to be optimistic. It certainly paints a positive picture and highlights the continued interest in BTL as an asset class. For those landlords who are looking to grow their portfolios, it’s important to seek advice to ensure they are accessing the best possible opportunities in the coming year.”
