In the face of market uncertainties, a striking 88% of portfolio landlords in the UK (those managing over five buy-to-let properties) have recently expanded their holdings. This surge in activity has occurred within the past six months, showcasing a robust confidence in the property market despite challenges. Shawbrook’s research, encompassing 1,000 residential landlords, reveals that around a quarter of these landlords plan to acquire additional properties in the coming year. Of these, 22% are aiming to purchase multiple properties.
Emma Cox, Shawbrook’s Managing Director of Real Estate, highlights the significant proactive steps taken by landlords to grow their portfolios. This trend not only responds to market demands but also introduces high-quality, energy-efficient rental options for tenants.
Comparison with Smaller Landlords
When we shift our focus to smaller landlords, those with one to four rental properties, their approach seems more cautious. Only 58% of this group have added to their portfolios in the last six months, indicating a more conservative stance in the face of market fluctuations.
Diversification Strategies
An intriguing aspect of Shawbrook’s findings is the diversification strategies employed by landlords. About 39% of those looking to expand are considering different locations, while 37% are exploring varied types of residential properties. Furthermore, 26% of portfolio landlords are turning towards student housing, and 21% are eyeing the retirement housing market.
This diversification is not just about expanding their investment horizons but also about meeting tenant demands and prioritizing energy-efficient buildings. A notable 33% have diversified to cater to tenant needs, and 28% to focus on greener properties.
Moreover, 36% of the landlords planning expansions are motivated by attractive deals currently available in the market.
Market Context and Future Outlook
The backdrop of these developments is a rental market grappling with high demand and low supply. September 2023 data reveals rental home demand at 51% above the five-year average, with available homes 30% below average. Concerns are rising over landlords selling rental properties due to escalating mortgage costs, which could exacerbate existing market challenges.
However, Shawbrook’s research shines a light on a group of savvy professional landlords who are not only weathering the storm but actively seizing investment opportunities to enhance the quality of the UK rental market.