Corporate landlords with large property portfolios are continuing to plan business expansion six months after the Renters’ Rights Act came into force, according to new research from LRG.
The findings, based on LRG’s Corporate Lettings division client base of landlords with portfolios typically exceeding 50 properties, indicate that 82% are actively planning to scale their businesses. One landlord aims to increase holdings from 500 to 10,000 properties in the coming years.
Arrears and rent data
The research shows arrears of more than 30 days have fallen from an average of 3.3% to 2.7% compared with the six months before the Act. Annual rent rises have increased to 6%, up from 5.7% previously.
Adam Hills, Client Services Director at LRG Living Markets, said the transition has been smoother than expected. “Both rent levels and arrears have improved and we’ve not seen the uptick in tenant turnover many feared when tenancies became periodic from day one,” he stated.
The research comes as rental affordability worsens across eight UK regions, highlighting ongoing pressure in the lettings market.
Investment strategy shift
Hills noted that professional landlords are targeting larger-scale opportunities including entire freehold blocks, commercial buildings for residential conversion, and portfolios from retiring landlords, rather than single property purchases.
Yield expectations have risen from 8% to above 10% over the past year as landlords factor in market uncertainty and potential impacts from rental legislation changes, according to Hills.
The findings contrast with reports of individual landlords exiting the market, suggesting a divergence between smaller and corporate operators. Landlords operating through company structures were also described as “unscathed” from the recent Budget, according to the research.
The data indicates that fears about periodic tenancies leading to increased tenant turnover have not materialised, though LRG stated it is too early to report definitively on changes in average tenancy lengths.
