Despite a high inflationary environment, which has seen interest rate hikes impact buyer confidence, the UK’s portfolio landlords remain largely undeterred in expanding their property portfolios, research from Shawbrook reveals.
According to its survey of over 1,000 residential landlords, 88% landlords said they had added to their portfolios in the last six months, with one in four (25%) intending to invest in an additional property within the next year, and one in five (22%) looking to purchase multiple properties.
This is compared to smaller landlords (those with between 1 and 4 rental properties) who have been less bullish, with just 58% having added to their portfolio in the last six months.
A substantial number of those looking to add at least one property to their portfolio were looking to diversify by location (39%), while 37% were actively exploring different types of residential property. In addition, 26% of portfolio landlords said they are turning their attention towards student housing and 21% were looking at the retirement housing market.
The research comes amid ongoing concerns of high-demand and low-supply in the UK’s rental market, with demand for rental homes 51% above the 5-year average, and the number of available homes 30% below average in September 2023[1]. Fears have also yet again surfaced of landlords selling[2] rental property due to rising mortgage costs, adding further concern to challenges already seen in the market.
Shawbrook’s research, however, highlights a cohort of savvy professional landlords continuing to invest and add quality rental stock to the market. Among those who said they were diversifying their property portfolios, close to a third (33%) said they had done so to respond to tenant demand, while 28% said they had done so to prioritise more energy efficient buildings.
In addition, of the 88% who said they were planning to add at least one property to their portfolio, over a third (36%) wanted to capitalise on good deals currently in the market, with 35% already having capital ready to invest.
Commenting on the research Shawbrook managing director of real estate Emma Cox says: “Whilst the property market remains challenging, it’s encouraging to see professional landlords continuing to invest and seek opportunities to diversify”.
She adds: “Looking ahead, it will be important for buy to let landlords to explore external financing options and lean on specialist lenders. To continue meeting buyer needs in a sustainable way, astute landlords will need to keep thinking one step ahead, adapting their strategies to adjust to the rapidly changing real estate landscape.”
