Buy-to-let landlords are building war chests

Risk-averse landlords are remortgaging primarily to build a war chest, research from Mortgage for Business has revealed.

Some 30% of property investors are now taking out a buy-to-let remortgage with a view to expanding their portfolio and growing their cash reserves.

Nearly half (46%) are increasing the size of their loans – significantly higher than the long-term average of 38%.

Steve Olejnik, managing director of Mortgages for Business, said: “Our research suggests the number one priority of active, professional landlords is to set themselves up with a war chest so they can look for growth. Smart landlords know that the time is coming to bag some bargains and start expanding portfolios. Increasingly, that is where their remortgaging priorities lie.”

This time last year, the main concern of remortgaging landlords was not to build up a war chest but to manage risk, using measures like moving onto a longer fixed rate mortgage and away from variable rate products.

Nowadays managing risk is the third most important concern.

Olejnik added: “Twelve months ago, in 2019, a lot of the landlords we worked with were looking to guard against risk.

“That’s shifting now as opportunities to purchase cheap properties presents themselves.

“With properties prices poised to drop before the end of the year, the balance between risk and reward is shifting.

“It will be interesting to see how landlords’ investment strategies adjust to changing tenant demand.”