60% of landlords planning to expand portfolio in next 6 months

Encouragingly, only 3% of investors are planning to reduce their portfolios over the next six months, down from 6% last quarter.

David Whittaker, managing director at Mortgages for Business, explained: “Landlord appetite for buying residential property is high. This will support the private rented sector and ease the strain on would be renters chasing too few properties.”

The research, which polled the views of 159 investors, showed complex buy to let property is becoming increasingly popular probably due to the more attractive yields compared to vanilla buy to let properties. 25% of respondents said that they were considering purchasing either HMOs, multi-units or semi-commercial property (or a combination of the three).

More than three quarters of landlords feel that lenders need to do more to support them and whilst it will come as no surprise that their main gripes were with rates, fees and LTVs, more interestingly landlords are looking for buy to let mortgages that cater for more specialist scenarios including more products for limited company applicants, products for holiday lets and more lending to ex-pats. Landlords were also interested in seeing more case-by-case underwriting rather than computer based lending decisions.

Just over half (54%) of investors who are planning to expand revealed they will need to refinance their existing properties. Of these, 20% are likely to struggle to secure finance because of a lack of equity, reflecting the dearth of high LTV mortgages in the market. As of June this year, there were only four 85% LTV mortgages available (from Kent Reliance).

8% of investors revealed they have been asked by lenders to refinance elsewhere, largely as a result of RBS which is looking to reduce its exposure to property and Bradford & Bingley which is looking to exit the market entirely.

David Whittaker commented: “Landlords are bullishly confident about the prospects of the buy to let market over the next six months. There are a huge number of would-be owners being displaced into the rental market every year, which has kept tenant demand sky high and pushed yields on private rental property over the 6% threshold.”

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0 thoughts on “60% of landlords planning to expand portfolio in next 6 months

  1. Edward Harkins

    It seems that every sector of the UK economy suffers a similar problem; the banks’ unwillingness to lend, re:

    “Just over half (54%) of investors who are planning to expand revealed they will need to refinance their existing properties. Of these, 20% are likely to struggle to secure finance because of a lack of equity, reflecting the dearth of high LTV mortgages in the market. As of June this year, there were only four 85% LTV mortgages available (from Kent Reliance).

    8% of investors revealed they have been asked by lenders to refinance elsewhere, largely as a result of RBS which is looking to reduce its exposure to property and Bradford & Bingley which is looking to exit the market entirely.”

  2. Leaders

    Demand for rented property has been extremely high for the last 18 months, leading to an increase in rents and very favourable conditions for landlords. All the towns and cities we operate in across the South offer many excellent investment opportunities, with high rental yields, strong demand and good capital growth potential and we would expect landlords to achieve a yield of up to 6% if they invest wisely. But there is a lot to consider before jumping into this buoyant market and would-be investors should do their homework thoroughly. It is essential to seek impartial, expert advice about where to invest and which property, and to be realistic. As with any investment there are negatives as well as positives, but many of the negatives can be avoided with the right planning, research and advice. For example, minimising problems by choosing the right property type in the right location for the right price, securing the right financing for your property purchase, planning for any periods when your property may be empty, calculating your potential yields correctly and viewing your property investment as a medium to long term proposition. It is important to remember that, despite rising rents and exceptionally strong demand, buy to let is not a way to make a fast buck. The biggest profits will come from capital growth rather than rental yields and this takes time. It is advisable to look at any property purchase as at least a 5-10 year investment. If you consult an experienced letting specialist – ideally a member of ARLA so you know that the staff are qualified and knowledgeable – you will maximise your chances of a successful, stress-free investment.

  3. Les

    Leaders, re. ” The biggest profits will come from capital growth rather than rental yields and this takes time.” I cant see this being the case for the next decade or so. Landlords should plan for small growth, if any. For example, I plan to buy a city flat for 50k, let at £500month for next ten years and happily sell on for 50k. If the values drop I’ll keep hold for longer. I think this will be the reality for most new & recent purchases…