Portfolio landlords eye property purchases amid ‘surprising’ optimism

Research from Aldermore found that 41% of portfolio landlords were intending to buy more properties over the next year.

This group was far more likely to expand their portfolio than landlords in general, with only 17% of all the 2,000 proprietors quizzed hoping to add more properties in the coming 12 months.

Unexpected pressures

Despite the generally positive mood, landlords recognised there were challenges in the market.

While the tax relief changes (25%) and higher stamp duty (22%) were the biggest reasons mentioned, they did not dominate the results as strongly as might be expected.

The growing pressure on yield (17%), pressure to keep rents down (14%) and increased landlord competition (11%) were also cited by significant numbers of respondents.

As a result, landlords admitted to facing some tricky decisions to deal with the impact of these forces.

Raising rents to cover higher costs and selling some of their properties were both acknowledged by 17% of the landlords, while 10% said they would seek to cut mortgage costs.

Of those who were not looking to expand their portfolio, 15% were planning to remortgage some or all their properties.

The main reason was to mitigate any interest rate rises (40%), while 27% wanted to unlock capital and 25% said they were not satisfied with their current lender.

Surprising optimism

Aldermore commercial director of mortgages Charles McDowell (pictured) said he was pleased and slightly surprised to see a net sense of optimism remained among buy-to-let landlords.

“Despite the recent changes, many still view buy-to-let as a good investment, with expansion on the horizon, particularly among those who are specialists in this area,” he said.

“Our research has highlighted that while landlords are weathering the storm of change, policy makers need to shift the spotlight away from the market. There has been a multitude of changes to the market in quick succession, with little time for them to bed in properly.

“Until the dust settles we’re unlikely to see the full impact on the sector and the ramifications for the future,” he added.