Key points –
- Over a quarter of private landlords in the UK are planning to expand their property portfolios in the next year.
- A significant majority, 67%, intend to maintain their current portfolio sizes, while only 7% plan to reduce their holdings.
- The rise in interest rates has posed a challenge for nearly half of the landlords, impacting their property investment management.
- Despite the cost of living crisis, 69% of landlords expect to increase rents in the near future as interest rates and mortgage repayments stabilise.
- The findings indicate a strong commitment among private landlords to either maintain or grow their property portfolios, highlighting the enduring appeal of buy-to-let investments.
A recent study conducted by Butterfield Mortgages has revealed some intriguing trends in the UK’s buy-to-let (BTL) market. According to this new research, an impressive 26% of private landlords across the UK are planning to increase their property portfolios over the next 12 months. This decision to expand comes at a time when only a small fraction, roughly one in 14, are considering selling their properties.
The Current State of the Buy-to-Let Market
Butterfield Mortgages, a provider of prime mortgages, commissioned an independent survey polling 2,000 UK adults. This study highlighted that a significant majority of landlords, about two-thirds (67%), have chosen to maintain their current portfolio sizes. Contrary to the speculation of a mass exodus of landlords from the BTL market, a mere 7% indicated any plans to reduce their portfolio size in the coming year.
The Impact of Rising Interest Rates
The study also shed light on the challenges faced by landlords, particularly with the recent rise in interest rates. Nearly half (49%) of the landlords surveyed acknowledged the difficulties in managing their property investments due to these increased rates. In the past year, only 37% of landlords have raised rents for their tenants. However, a notable 62% expressed discomfort in increasing rents, especially given the ongoing cost of living crisis affecting many tenants.
Anticipated Changes in Rental Yields
Looking ahead, there’s an expectation of change in the BTL market. As interest rates and mortgage repayments begin to stabilise, a significant 69% of landlords anticipate raising rents in the near future. This expected increase could potentially lead to improved rental yields for landlords in the months ahead.
Expert Insights
Alpa Bhakta, CEO of Butterfield Mortgages, commented on these findings, stating, “For the best part of a decade, speculation has been rife that landlords will quit the BTL market in their thousands. However, our data is the latest to challenge such predictions, showing that the vast majority of private landlords remain committed to either maintaining or growing the size of their property portfolios. It underlines the enduring appeal of BTL as an asset class, even despite added costs and regulatory complications for many.”
Conclusion
This study by Butterfield Mortgages paints an optimistic picture for the UK’s BTL market. Despite the challenges posed by rising interest rates and regulatory complexities, many landlords are not only holding steady but are also poised to expand their portfolios. This trend indicates a robust and enduring interest in property investment among UK landlords.