Buy to let lender Paragon’s recent research shows that professional and larger-scale landlords are still investing and are increasing the size of their portfolios through more targeted investments.
With an average portfolio size for these types of landlords now at 13.1 properties, their average size is up from 12.8 properties in just three months. This puts the value of the average professional landlord’s portfolio at £1.76m, the highest ever recorded.
This trend defies all the changes and ongoing pressures on buy-to-let landlords, in an operating environment that has seen big changes to the taxation rules and a big increase in the complexity and scope of the regulations affecting the sector.
Paragon’s quarterly survey of the buy to let market shows that these professional and larger scale landlords are roughly three times as likely to be purchasing another buy to let in the next quarter than are smaller scale landlords.
HMO (Houses in Multiple Occupation) purchases have also been on the up. The number of landlords considering purchasing an HMO purchase is up from 5% of landlords to 20% says Paragon.
Paragon’s reading of the evidence points to prospective buy to let buyers generally having more experience of the industry, and with an eye to improving the average income yields of their portfolios. This is a result of trying to overcome the negatives of the tax rules.
The survey covered some 200 experienced landlords. It shows that the number of landlords operating between 11 and 20 properties is beginning to grow, now accounting for 18% of this sample, which Paragon claims is up from 14% three months ago.
But, says Paragon, despite these findings, overall landlord sentiment remains subdued with only 13% of the respondents feeling optimistic about the future. Landlords are being cautious about their overall financial position. Debt levels are down to just over one-third of the average portfolio value says Paragon.
Director of Mortgages at Paragon, John Heron says:
“Professional landlords with larger portfolios make up the backbone of the UK’s Private Rented Sector and it is encouraging to see them continue to build their property portfolios.
“However, with a heightened interest in higher yielding property types and an increasingly prudent approach to financial management, it is clear that landlords are proceeding cautiously as they seek to head off the twin challenge of higher tax and growing economic uncertainty.”