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More buy-to-let landlords plan to expand their property portfolio


Buy-to-let Landlords, Investment
Confidence remains high among buy-to-let landlords as the sector continues to show strong long-term prospects. What could this mean for the private rented sector?

Research from Paragon Bank reveals the number of landlords who plan to expand their portfolios is higher than those who intend to reduce. This is the first time this has happened in four years. The research includes nearly 900 landlords and was carried out by BVA BDRC. When asked about their intentions over the next year, 19% of landlords said they plan on investing in property.

On the other hand, less than one fifth of landlords shared they intended to sell at least one property. This has decreased from the previous two quarters. It’s also a return to the level seen in Q2 2020, which is when lockdown restrictions were first announced.

Additional research by Hamptons recently revealed the number of buy-to-let investors selling their properties has slowed down. Despite tax and legislative changes in recent years, many landlords and investors still consider buy-to-let a profitable and worthwhile endeavour.

The attractive market conditions have led to the highest number of buy-to-let landlords on record at 2.7m. Low interest rates and the stamp duty holiday have even helped entice more small and first-time landlords to enter the buy-to-let sector.

A professionalising sector
In recent years, the buy-to-let sector has professionalised. A record number of landlords have set up limited companies for their property investment portfolio. Recent regulation and tax changes have caused more landlords to treat buy-to-let as a full-time business.

The sector is expected to continue to professionalise in the coming year. Because of this, more landlords and investors will likely be able to provide properties tailored for what modern renters prioritise. This will further improve industry stands and improve tenants’ rental experiences. This is especially important as more people are reliant on the private rented sector for a home.

Richard Rowntree, managing director for mortgages at Paragon, comments: “News that for the first time in over four years more landlords are intending on buying than selling is fantastic. This is because not only is it good for the industry but, more importantly, it’s good for tenants.

“More investment in the private rented sector contributes to higher standards, a moderation of rents and more choice for the millions who rely on the private rented sector for flexible, affordable housing.”

Growing demand in the rental market

Demand in the UK rental market has increased with no sign of slowing down. Propertymark’s March Private Rented Sector Report revealed the number of new prospective tenants increased for the third consecutive month. Because of this, rents have also been on the rise, especially in city centre locations.

“During the uncertainty of the past year or so, the role of the PRS has become increasingly important, evidenced by the extremely high levels of demand we have seen for some time now, it’s great to see landlords are responding to this,” he says.

Further optimism among the buy-to-let sector

A previous survey by Paragon Bank also revealed there had been an uptick in optimism from mortgage brokers as well. In a survey of nearly 200 intermediaries, 50% of brokers said they anticipate higher levels of buy-to-let mortgage business over the next 12 months. This is a seven-year high and is up from 41% in Q4 2020.

Richard Rowntree explains: “It’s fantastic to see that such high levels of optimism have been recorded following the challenges of the past year or so and that this is being driven by strong levels of demand. The extension of the Stamp Duty holiday is certainly a driver of that, but it is underpinned by longer-term demand for rental property.”

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