George Gee is commercial director at Foundation Home Loans
Successful landlords are always considering several things at any given time. Factors such as portfolio diversification, profitability, yields, tenant demand, rental voids and access to borrowing are always high on their agenda and any combination of these can lead to increases (or decreases) in activity levels and confidence.
These are ongoing considerations which, time and time again, are put to the test by regulatory, policy, tax and economic change.
However, time and time again, the BTL sector appears able combat these, even in most challenging of times.
The sector really is something of a phenomenon and as we emerge from the most turbulent 12 months in recent history, it’s frankly quite astonishing to read that – for the first time in four and a half years – a higher proportion of landlords are intending to expand their portfolio rather than reduce it (19% vs. 17%).
This headline grabbing news emerged in the recent Q1 2021 Landlord Panel research from BVA BDRC which also outlined that landlords with 11+ properties are the most likely to be looking to grow their portfolios over the next year (30%).
Digging a little deeper into this research, the incidence of recent buying and selling activity remained unchanged in Q1 with both at 7%.
The typical number of properties bought and sold by landlords was also said to be similar to Q4 levels, at 1.6 and 1.3 respectively.
Landlords with 20+ properties were suggested to have been most active in terms of both buying (20%) and selling (13%).
In addition, the 19% looking to expand their portfolios plan to acquire an average of 2.0 properties each whilst the 17% intending to sell property in the next 12 months expect to divest an average of 2.2 properties.
Landlord buying strategies remain largely unchanged from Q4, with purchasing via a limited company structure remaining the most popular option (47%).
Purchasing strategies remained relatively similar regardless of portfolio size, with 11+ property landlords only slightly more likely than their smaller counterparts to purchase through a limited company option (51% vs. 46%).
On a regional basis, landlords operating in the North East and Wales were reported to be most likely to be active in the BTL property market in the next year, with around half looking to either buy or sell.
These figures really do highlight the confidence being shown throughout the sector and this is certainly being reflected in the numerous conversations our BDMs and sales team are having with intermediary partners and a variety of landlords.
A factor which is again demonstrated in the Q1 data which showed that landlord confidence has risen consistently since the lows of Q1 2020.
All optimism indicators are now at their highest levels since at least Q1 2019 (with the exception of prospects for the UK’s financial market which saw an unexpected peak in Q4 ’19), with the highest proportion of landlords feeling upbeat about the near-term outlook for the wider private rental sector and capital gains since the end of 2016.
These are all hugely positive signs which reflect just how robust the housing market has been over the past 12 months and the role the private rented sector has played within this.
Looking beyond Q1, opportunities will emerge for proactive advisers from a purchase and remortgage standpoint with competition likely to heat up in the product arena to reflect this ongoing confidence. And long may this continue.