Landlords with bigger portfolios more likely to invest further

British landlords now have an average of 13.1 properties in their portfolio, up from 12.8 properties three months ago, the latest figures show.

Those with bigger property portfolios are more likely to add to their investment than those with a fewer number of properties and investment in HMOs are rising, the research from Paragon shows.

It also shows that landlords with between 11 and 20 properties have grown as a proportion of the survey population from 14% to 18%. As a result, average portfolio values are getting higher, rising from £1.68 million in the first quarter of 2019 to an all-time high of £1.76 million.

Some 11% of larger scale landlords are likely to be considering a property purchase in the next quarter than their smaller scale counterparts of whom just 4% are considering doing so.

The number considering buying HMO property has increased sharply, up from 5% to 20% and the firm says that this indicative of higher experience levels amongst prospective buyers and that it also suggests that landlords are looking to add higher yielding properties into their portfolios perhaps to offset some of the pressure from rising tax costs.

Despite the higher activity levels among larger scale landlords, overall landlord sentiment remains subdued with only 13% of landlords feeling optimistic about the future.

Not surprisingly therefore, landlords continue to take steps to bolster their financial position with debt still barely over one third of average portfolio value and mortgage payments as a proportion of rent down from 27% to 25%.

‘Professional landlords with larger portfolios make up the backbone of the UK’s Private Rented Sector and it’s encouraging to see them continue to build their property portfolios,’ said John Heron, director of mortgages at Paragon.

‘However, with a heightened interest in higher yielding property types and an increasingly prudent approach to financial management, it’s clear that landlords are proceeding cautiously as they seek to head off the twin challenge of higher tax and growing economic uncertainty,’ he added.