Landlords expand and diversify their BTL portfolios amid market confidence

Landlords expand and diversify their BTL portfolios amid market confidence

0:02 AM, 1st February 2024, About 4 months ago

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More than half of buy to let landlords have increased their property holdings in the past year, a new study by The Mortgage Lender (TML) has found.

The research, which surveyed more than 1,000 residential BTL landlords, showed that 52% of them acquired more properties in the last 12 months, with 25% buying one more and 27% buying several more.

The trend of portfolio expansion is set to continue this year, as 52% of landlords intend to buy more properties in the next 12 months, with an equal split of 26% planning to buy one more and 26% planning to buy several more.

The main driver for portfolio growth was increased tenant demand for 31% of landlords, followed by having spare capital to invest for 25% of landlords.

‘BTL plays an important role’

TML’s head of key accounts and specialist distribution, Chris Kirby, said: “BTL plays an important role in the residential property market, ensuring that there continues to be a good supply of quality and well-maintained rental properties to meet consumer demand.

“Last year’s high inflationary 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.”

He added: “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.”

Landlords have been diversifying their portfolios

The research also revealed how landlords have been diversifying their portfolios by property types and locations.

TML says that 21% of landlords bought different types of properties in the last year, such as flats, houses or HMOs, while another 21% said they bought properties in different regions across the UK.

One of the reasons for portfolio diversification was to improve the energy efficiency of their properties, as 20% of landlords said they bought properties with better Energy Performance Certificate (EPC) ratings in the last year.

Not all landlords have been expanding their portfolios

However, not all landlords have been expanding their portfolios, as 31% of them sold one or more of their properties in the last year, and 33% plan to do so in 2024.

The top reason for selling properties was concern over re-mortgaging due to rising interest rates, mentioned by 35% of landlords, followed by concern over falling house prices, a reason given for 28% of landlords. 23% of landlords said they sold a property in the last year to buy another one that was a better investment.

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