That is understandable, and it’s clear there are a combination of factors and considerations landlords are having to take into account. Particularly those who may not be portfolio ‘players’ and only have one or perhaps two properties to consider, where the ability to take any sort of loss on a property is less manageable.
The ongoing general narrative is that landlords are leaving the sector in ‘droves’ and a lack of supply in the private rental sector (PRS), plus the need to cover increased finance costs, is forcing rents up.
There, of course, is some truth in that analysis – especially when you add in the context of soaring tenant demand – but it certainly doesn’t tell the whole story, not least because a large number of PRS properties have no mortgage costs associated with them. Over a third of landlords (36 per cent) have no buy-to-let mortgage exposure at all.
For those that do, and for those landlord borrowers who have been seeking refinance over the last six to 12 months, the picture – specifically rates – is likely to have looked very different to when they last financed the property.
Reassessing investments
However, as advisers will know only too well, while the monthly mortgage costs may not be the same, this is not to say that the vast majority of landlords are disinvesting wholesale, or indeed, deciding that property investment is no longer for them.
Indeed, the latest landlord survey results – carried out amongst over 900 landlords on our behalf by BVA BDRC – does show some encouraging feedback from those surveyed about their long-term future and intentions within the sector, and certainly highlight a borrower demographic which is going to need quality, professional advice for many years to come.
For a start, on average, landlords said they will stay in the PRS for at least another nine and a half years – that doesn’t suggest to me that the majority are planning their immediate exit strategy.
And while it is those who perhaps own just a single property who are more likely to be eyeing up an exit in one or two years, those with portfolios of any size are much more inclined to be looking at a time horizon that spans between five and 15 years.
What is also noticeable is an increase in the number of landlords who are unsure about their length of time they will stay invested. Again, totally understandable, and individual circumstances dictate everything here, particularly if you are some way from your next remortgage, if you’re unsure what you’ll be able to achieve rent/rate/monthly payment wise as well as how you and the property will measure up against affordability criteria in a higher-rate environment.
More professionalisation
It’s clear and obvious however that as the PRS has moved towards a more portfolio or professional-focused landlord community. That includes those with larger numbers of properties who have greater clarity about their long-term future within the sector and don’t just want to stay invested with what they have, but add to those portfolios should their circumstances allow.
This latest survey suggests that, in the last three months, the number of landlords reporting divestment has actually fallen back to the level record in Q4 last year, while those wanting to acquire remains stable.
And, we can see why – even with all the added pressures, both regulatory and financial – placed upon landlords over the last decade or so, landlords continue to make a profit on their properties.
They continue to seek out those homes which can give a strong yield – such as houses in multiple occupation (HMOs) and multi-unit blocks, the proportion reporting rising rents has increased, and the proportion of landlords intending to use a buy-to-let mortgage for their next purchase has gone up.
A continued interest
These are all positive strands within a wider narrative which can often suggest that landlord numbers are down to their bare bones, and they have little or no intention to stay invested. That simply isn’t the case.
For advisers, it’s therefore going to make continued good business sense to keep that buy-to-let advice arm strong within the wider range of services, and to focus particularly on existing landlord borrowers, who will not just need help around remortgage and purchase but are seeking support in areas such as meeting the minimum standards for EPCs on a property, which are likely to be C in the near future.
Keeping on top of this sector, the products and solutions that are offered by lenders such as ourselves, will continue to help develop business and income streams, and will certainly make yourself more in tune with landlord borrowers and their future needs.
