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Over a third of buy-to-let landlords plan to grow portfolios

Anna Sagar
Written By:
Posted:
January 16, 2024
Updated:
January 16, 2024

Around 34 per cent of buy-to-let landlords are planning to expand their portfolios in the next 12 months, a report has found.

A national report by Together, which surveyed 500 respondents who had taken out a commercial mortgage in the past with at least four properties in their portfolio, found that only 10 per cent of buy-to-let landlords are cautious about the outlook of their business in the year ahead.

It added that a quarter are planning to refinance properties in the next year to fund growth.

The study also found that around 44 per cent of respondents were de-risking and shrinking portfolios and 14 per cent exited the market altogether.

However, the vast majority of buy-to-let landlords are committed to increase their portfolios as inflation had fallen below five per cent.

Over half of all respondents would recommend others to invest in UK commercial property and 42 per cent have seen an increase in revenue in the last 12 months.

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Around 16 per cent of commercial landlords were exiting altogether, but this provides opportunity for a “new generation of professional landlords and developers to step in”.

 

Nearly half buy-to-let landlords would use specialist lender

Around 42 per cent of all respondents say they would prioritise using a specialist lender over a mainstream one in the next 12 months should they need extra additional financing for commercial property cases.

Over a third, 39 per cent, said that specialist lenders were prepared to take a greater interest, grant larger loans and support entrepreneurial plans, 29 per cent said that they were faster and another 29 per cent said that they provide the best level of service.

Meanwhile, buy-ti-let landlords noted that government support is vital to address the lack of housing stock, with 20 per cent of UK professionals keen for the skills shortage in the building trade to be address and 18 per cent wanting a review of rising costs of materials and labour.

Chris Baguley, group channel development director at Together, said: “The short, sharp shock in interest rates since the Covid years triggered some cautiousness in the commercial market while investors were trying to predict where the peak would be.

“With rates settling, while there is still an overall flattening; activity is returning as the sector reacclimatises to the new environment. At Together, we are still funding more than a thousand completions a month, highlighting the underlying appetite in the market.”

He added: “What continues to be apparent is the clear optimism and enduring health of the commercial sector. The winners of 2024 and beyond will be those who are able to seek out new opportunities, spot where best to create value and use the right financing to capitalise on emerging growth sectors.”

Rob Thomas, economist and principal researcher at the Intermediary Mortgage Lenders Association (IMLA) said: “The improving outlook we can see in our macroeconomic forecast, coupled with supportive structural factors such as rising population and constrained supply due mainly to planning constraints, allows for a recovery in property prices and markets from 2025, picking up momentum from 2026 onwards.

“This in turn supports a recovery in lending to these markets despite what has been a tougher financial environment.”