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BTL Market Forum: Landlords ‘pruning under-performing properties’ but not completing a mass selloff – BVA BDRC

  • 24/04/2019
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BTL Market Forum: Landlords ‘pruning under-performing properties’ but not completing a mass selloff – BVA BDRC
Landlord confidence is now lower than it was during the credit crunch with more landlords planning to sell properties than to acquire over the next two or three years, according to BVA BDRC research.


However, those planning to sell are more commonly those with larger portfolios who are typically pruning badly performing properties, with overall landlord profitability remaining strong.

Speaking at the Buy to Let Market Forum in Manchester earlier today, BVA BDRC director Mark Long described how former chancellor George Osborne had “taken a baseball bat to the buy-to-let market” leaving landlords feeling “battered and bruised”.

As a result of the succession of changes, he noted somewhat of a paradox in the market, where landlord confidence was lower than during the last recession, but profitability was strong and arguably improving.


More landlords selling

Long (pictured) was discussing the results of BVA BDRC’s latest research in the first quarter of 2019 with 1,000 landlords who are members of the National Landlords Association.

“One of the most interesting impacts of George Osborne’s changes from 2016 is the extent to which landlords are planning to add or sell properties in the next 12 months,” Long said.

“Prior to 2016 we had a 3:1 ratio for years of landlords saying they will add at least one additional property to my portfolio in the next year, compared to selling.

“Since 2016 that trend has inverted and we now have a slightly higher proportion of landlords saying they will sell properties – we had not seen that trend at all prior to 2016.”


‘Tactical pruning’

Long revealed that landlords with larger portfolios were more likely to be divesting with three in 10 of those with more than 20 properties planning to sell at least one in the coming 12 months.

That figure was much higher than the overall landlord group.

“What we’re hearing from this population, at the moment at least, is that this is a tactical pruning of under-performing properties, and not a mass dumping of portfolios,” he continued.

“But they are pruning out those properties which might be void for long periods or generating unacceptable yields.”


‘Still a strong profit’

He highlighted that notwithstanding all the negative attitudes, profitability remained really strong with an “inexorable upward trend” since 2007.

“So for all the hard work, difficulty and landlords feeling under pressure, they are continuing to derive strong profitability from running a property portfolio,” he continued.

Long agreed there was a caveat that the survey only questioned active landlords, and highlighted that the data showed one in ten landlords strongly intend to exit the market in the next couple of years.

“But for those that remain there’s a strong profit still to be derived,” he added.


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