A significant number of portfolio landlords in Britain plan to buy more properties over the next 12 months despite challenges and changes in the sector.
Some 41% aim to expand their portfolio but 17% say that they will increase rents to cover higher costs, according to the research from specialist bank Aldermore, while 10% will reduce the value of their buy to let mortgages so they are borrowing less.
It also found that 25% of landlords say changes in tax relief are their main challenge going forward while 22% highlight increased stamp duty which means they have to pay the additional home charge of 3% on top of the normal rate.
Some 15% said the main issue is growing pressure on yield, 14% said it is a pressure on rent and 11% believe that increased competition in the market is proving challenging.
Overall private landlords are feeling positive about the future of the market, and the opportunity it presents despite predictions the market will shrink. Some 44% believe the private rental sector will grow.
Many of those who are looking to expand are doing so because they still see the rental market as a good investment opportunity, with yields far outpacing current savings rates. Many also acknowledge the opportunity, with the increasing demand for rental properties particularly amongst millennials, many of whom cannot afford to get on the property ladder.
The research also shows that just 8% of private landlords intend to reduce the number of properties they own. This is predominantly due to ongoing Government as many cited too many restrictions and higher taxes while some believe that tenants are protected to the detriment of the landlord.
‘There is no denying that the buy to let market has taken a bit of a battering, thanks to a multitude of regulatory, underwriting and tax changes,’ said Charles McDowell, Aldermore’s commercial director for mortgages.
‘However, we are pleased, and slightly surprised to see, that there remains a net sense of optimism amongst buy to let landlords. Despite the recent changes, many still view buy to let as a good investment, with expansion on the horizon, particularly amongst those who are specialists in this area,’ he explained.
The research also found that 15% of landlords who are not expanding their portfolio are planning to remortgage some or all their properties. Some 40% said this is to mitigate any interest rate rises, 27% want to unlock capital and 25% say they are not satisfied with their current lender.
‘Our research has highlighted that whilst landlords are weathering the storm of change, policy makers need to shift the spotlight away from the market. There has been a multitude of changes to the market in quick succession, with little time for them to bed in properly. Until the dust settles we’re unlikely to see the full impact on the sector and the ramifications for the future,’ McDowell concluded.
