Professional Landlords holding portfolios of 6 to 60 buy-to-let properties in the UK have increased in the first quarter of 2018. The figures have been used to show that confidence remains strong in the sector. Despite the recent changes to regulations, taxes, stamp duty on second homes and mortgages for buy-to-lets over the past few months, these figures suggest landlords are remaining optimistic. Many industry experts had forecast a slowdown in the market, with these tax changes and increased bureaucracy putting off landlords. However, what it does seem to have done is deter the amateur landlords, which could be a good thing.
According to recent figures from the specialist lender, Paragon, the number of landlords holding 6 to 20 properties rose from 35% to 39% of the overall market in the first three months of this year. However, landlords with 50 or more properties dropped from 6% to 4%. In the same period, the number of landlords with three to five properties fell from 26% to 24%. This could be seen as an indicator that they are actually increasing their portfolio size and investing in more properties to move up into the next bracket.
Paragon managing director of mortgages, John Heron, felt the tax and regulatory changes have led to an emerging polarisation between smaller, possibly amateur, landlords and professionals with substantial portfolios. Furthermore, the study shows that landlords are reducing the size of their buy-to-let portfolios as a way of spreading their risk. The average number of properties held by landlords with portfolios has dropped to 11.6 properties from 13.1. Also, 26% of those surveyed said they intended to sell some, if not all, of their properties within the next three months. Previously, 22% of those asked said they would sell. In the same time period, 24% of landlords have put up their rents, which could be another indication that they are taking steps to ensure they do not lose out financially through the recent tax changes. Despite this, the rise in landlords with larger portfolios can be seen as confidence in the market, with professionals being able to work with the recent changes.
Overall, property is still a sound investment, with prices continuing to rise plus healthy yields being available in many areas. The commercial buy-to-let market, particularly in the retail sector, may be more volatile, but there remains high demand for residential buy-to-lets in the right areas.
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