The resilience of the UK housing market continues to attract property investors looking to capitalise on future price growth and rising rental yields.
In an industry that still has “plenty of optimism and potential”, a new report has revealed that investors are still keen to snap up more property, but with slightly different strategies to ensure profitability.
Handelsbanken’s 2025 Property Investor Report found that 54% of property investors plan to boost their portfolios during 2025; while 80% said they expect the values of their existing portfolios to rise this year.
With certain markets outperforming, such as the North of England which continues to see house price growth well above the national average, the majority of value growth is expected to be seen in these areas, while others may be more subdued this year.
As such, Handelsbanken’s research also revealed that of those property investors planning on expanding their portfolios, 73% said they would diversify geographically, while 75% said they would diversify based on sector. This shows the greater level of strategy being used by investors at the moment, with agility being key to successful investment.
Shift to sustainability
Another strategic shift that the report noted was the tendency for property investors to opt for more sustainable investments – which it notes can give investors a competitive advantage.
More than three quarters (77%) of tenants are showing an interest in sustainable features like heat pumps and solar generation in their properties, as noted by investors. A huge 92% of investors also feel that tenants will pay a premium for a greener property.
This view is supported by the fact that 36% of people reported feeling “more positive” about the upcoming legislative changes that will mean rental properties in the UK will need a minimum EPC rating of C to be able to operate, which could come into force from 2030. Around half (56%) of respondents don’t believe the EPC reforms will impact them.
Chief branch officer Chris Teasdale added: “I was encouraged to see investors believe that tenants recognise the value of a property that benefits from being more sustainable and are willing to pay a higher rent as a result.”
Property investors ‘cautiously optimistic’
Handelsbanken’s report was based on a survey of larger portfolio investors and property management professionals, so may not reflect the movements and plans of smaller-scale landlords in the UK.
The sector has seen more professionalisation over recent years, with a huge increase in the number of rental properties owned through limited companies rather than individuals. This shift has mainly been linked to tax changes making a company structure more appealing.
While a greater proportion of property investors intend to expand their portfolios this year, 24% said they plan to dispose of properties. The number of respondents expecting “significant” value growth has reduced in the latest survey, from 31% last year to 14% this year.
Chris Teasdale said: “The results of this year’s report show an industry that still has plenty of optimism and potential, even in the face of uncertainty, challenge, and change. Whatever the wider economic backdrop, the good news is that this is still a sector with plenty of appetite for growth.”
The report went on to note that the UK property market remains a “dynamic arena”, with property investors using new strategies such as diversification and an increased focus on sustainability in order to navigate uncertainty – with a continued view on long-term growth.
Gareth Williams, senior financial product owner, corporate lending at Handelsbanken, said: “The overall stability in market sentiment reflected in the report is welcome. However, we see our property investment customers taking a longer-term view across their portfolios, which positions them favourably to manage through these cycles.”
If you’re looking to strategically expand your property portfolio in 2025, get in touch with BuyAssociation today to discuss our current and upcoming opportunities.
