Higher interest rates no problem for new generation of investors

In the face of economic uncertainty, many professional landlords and investors are continuing to grow their property portfolios, according to one estate agent.

Local estate agents in Leeds HOP say they have agreed to more than £1.5 million worth of investment sales in the area.

The estate agents say Leeds is becoming an investment hotspot for professional landlords and overseas investors.

Seeing older landlords deciding that now is the time to cash out and sell up

Neil Dawkin, director of HOP’s investment division, said: “The main difference in the current market is there are fewer first-time investors now, who are more circumspect due to the cost of borrowing, regulatory changes and tax implications, which makes it a bigger leap for them.

“We’re typically seeing older landlords deciding that now is the time to cash out and sell up.

“Many don’t want to adapt to the potential new legislation proposed in the Renters (Reform) Bill and instead are taking advantage of the price rises the market has seen in recent years.”

He added: “In their place, a newer generation of investors are buying and modernising the properties for today’s market, with our typical clients now in their late 30s and 40s.”

Professional investors see this as an opportunity to grow portfolios

Mr Dawkin says that whilst interest rates remain high many professional investors see this as an opportunity to grow their portfolios.

“Even though The Bank of England increasing interest rates to 5% certainly isn’t helping the market, many experienced and professional investors, see this as a good time to add to their portfolios, because they are competing with fewer buyers.

“They’re focused on the medium to longer-term returns and will often have larger deposits or be full cash buyers, so they are less impacted by interest rates.”

More property investors are coming to Leeds

Mr Dawkin added that more and more investors are coming to Leeds due to lower prices.

“Most of our current buyers are based in London and the South of England and are attracted to Leeds because prices are much lower, meaning they can achieve yields in excess of 6%.

“This is boosted further by the city’s four universities, with more than 60,000 students, which also drives demand for houses in multiple occupation (HMOs), from both investors and tenants.”

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