Landlords' portfolio expansion plans

We’re all aware that the Private Rental Sector (PRS) has enjoyed strong growth over the last few years, with it currently accounting for c.16% of all housing stock. Most predictions suggest that the PRS is set for further expansion, but will that actually be the case? And what kind of investor/landlord will be fuelling future growth?

BDRC Continental’s quarterly ‘Landlords Panel’ research investigates the extent to which property is being added and divested from portfolios. Our latest Q2 data supports the assertion that the PRS will expand beyond its current position. In the previous three months, 1 in 10 (12%) landlords has added new property to their portfolio, typically 2.6 properties each. Conversely 5% have reduced the number of properties owned (typically 1.4 properties), producing a clear net gain.

Looking ahead, more than 1 in 5 (22%) landlords seriously intend to add additional property to their portfolio over the next 12 months, whereas only 8% plan to divest in the same timeframe. This should generate, at least theoretically, a healthy inflow of fresh stock to the PRS.

Delving deeper into the data, it’s clear that a great deal of recent property acquisition and future intended growth is being fuelled by the ‘larger’ portfolio landlord. Indeed, 34% of investors managing 20+ properties plan to add more units within the next 12 months, compared with just 9% of those with a single property currently. Much of this activity will hinge on the extent to which investors can access Buy-To-Let lending at competitive rates and with suitable criteria, with many investors feeling constrained by a relative lack of mortgage funding over the last couple of years.

Landlords tell us it’s a great time to be in the PRS. Yields are strong, tenant demand is high and they report ‘the benefits far outweigh the downsides of being a landlord’. Let’s see if this positive sentiment continues to be translated into action.

For more information, contact Mark Long 020 7400 1016.