The property investment landscape for buy-to-let landlords seems positive with many planning on acquiring more homes to rent out amid strong rental demand.
As yields for landlords across many parts of the UK – particularly in certain top-performing areas – remain strong and rising, the buy-to-let market continues to be viewed as a fruitful and profitable place. Particularly during uncertain times, property can be one of the more reliable assets in which to invest.
The country’s rental market is in high demand right now, as has been the case for a number of years. This is being exacerbated by a number of issues, including more prospective first-time buyers opting to rent for longer due to being unable to secure a mortgage, meaning a greater need for rental homes.
As such, while inevitably some buy-to-let players will opt to leave the industry this year, new research indicates that a huge number of investors are planning to do the exact opposite. According to figures from Landbay, 42% of landlords intend to purchase more rental properties in 2023.
Maintaining and expanding portfolios
It seems that portfolio landlords in particular, who own multiple properties and are likely to run their rentals as their main business rather than a sideline, are the most keen to buy more property this year. They are also likely to have been in the market for longer, and will have lived through its various peaks and troughs.
Around half of all the landlords surveyed that already owned properties said that they wanted to grow their portfolios this year, higher than the average response. Further to this, 79% of landlords planning to buy a new property said they would not sell any of their existing ones.
A fifth of respondents were opting for a ‘wait-and-see’ approach when considering their next move, while more than a third said they wouldn’t buy more properties this year. Almost two thirds (64%) plan to retain the properties they already own, which is a far cry from the mass exodus some had been expecting.
Encouraging news for landlords
In many parts of the UK, landlords are reporting being inundated with enquiries when they list homes for rent, due to the colossal demand seen by tenants at the moment. This has been pushing rents up, as well as ensuring that homes are only vacant for minimal periods of time.
The outlook for the mortgage market is another positive for landlords at the moment, as rates continue to improve. Of course, many will be affected by a major increase this year compared with products secured prior to the base rate rising, but the trajectory is currently downwards rather than upwards.
All of this serves to improve the potential for strong yields for landlords at the moment, even despite mortgage costs being higher than people have been used to. Those that have been operating in the buy-to-let market for many years will also have worked through times when mortgage rates were significantly higher than they are currently.
Paul Brett, Landbay’s managing director for intermediaries, said: “Rather than a ‘mass exodus’, this latest data shows a real statement of intent among landlords to not only maintain their existing portfolios but to expand. This is hugely encouraging given the myriad of challenges facing landlords and the wider buy-to-let sector.
“Landlords will be encouraged by the news of rates trickling down recently. With the new year bringing lots of positive indicators for the year, plus strong rental yields still reported by many respondents, landlords clearly have the confidence to push ahead with expansion plans.”
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