Landlords pause their buy to let investment

Landlords weighing their next portfolio move are cautious about buying again, with 52% saying they do not currently plan to purchase another property.

Landbay’s latest landlord survey found 35% plan to add to their portfolios over the next 12 months.

When asked about their prospects, 41% of landlords described themselves as neutral, 21.8% are positive and 36.8% negative.

The response was more downbeat when landlords were asked about the UK economy.

Some 69.2% expressed a negative outlook, against 27.1% who were neutral and 3.8% who were positive.

Confidence stabilises

Landbay’s sales and distribution director, Rob Stanton, said: “The key difference compared to the results of our previous survey is that sentiment and confidence appears to have stabilised, even during a somewhat turbulent few months, particularly when it comes to product availability and rates.

“Landlords, for the most part, appear to be very confident about their own property businesses, and the future of their investments, even when their views on the future performance of the wider economy remain far more sceptical.”

He added: “What we are therefore seeing is a landlord community which is predominantly focused on what they can control.

“They are making clearer decisions on whether to buy, sell or hold, and are continuing to adapt their strategies to ensure their portfolios remain profitable.”

Landlords report yields up

Reported yields varied across portfolios, Landbay found, with 27% of landlords saying they were achieving gross yields of between 4% and 6%.

Another 22% reported yields from 6% to 8%, and 16% said their gross yields were 10% or more.

More than 75% of landlords said they intended to increase rents in some form during the next 12 months.

The lender found that rent-setting approaches were becoming more flexible, partly because of the introduction of the Renters’ Rights Act.

Landlords now consider costs, legal responsibilities and affordability for tenants.

Landlords opt for fixed rates

Fixed-rate borrowing remained the preferred route for landlords considering their next mortgage.

In total, 87% indicated they would favour a two-, three- or five-year fixed-rate deal, with five-year fixes selected by 47%.

Tracker products attracted far fewer respondents, with 6% saying they were likely to choose one for their next BTL mortgage.

The survey found 83% of landlords used a broker from the outset for their last buy to let mortgage, while 10% began the process themselves before turning to a broker to complete the deal.

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