Landlords increase portfolios through targeted investments

Professional and larger scale landlords are increasing the size of their portfolio through more targeted investments, according to the latest research. 

Specialist lender Paragaon found that the average portfolio size for these landlords is now 13.1 properties, up from 12.8 properties three months ago. As a result, average portfolio values are also rising, up from £1.68m in the first quarter of this year, to an all-time high of £1.76m in the last quarter.

This comes despite ongoing pressures in the buy-to-let market which have seen increased taxation and regulation in recent years.

This quarterly survey shows that larger scale landlords are now nearly three times as like to be considering a property purchase in the next quarter than their smaller scale counterparts. 

The survey also shows there has been a significant sharp increase in those considering buying HMO properties — up from just one in 20, 5 per cent, to one in five, 20 per cent.

Paragon says that not only is this indicative of higher experience levels amongst prospective buyers, it also suggests that landlords are looking to add higher yielding properties into their portfolios, perhaps to offset some of the pressure from rising tax costs.

The survey of 200 seasoned landlords, shows the number with between 11 and 20 properties is growing, and now accounts for 18 per cent of this survey base, up from 14 per cent three months ago.

Despite the higher activity levels among larger scale landlords, overall landlord sentiment remains subdued with only 13 per cent of landlords feeling optimistic about the future.

As a result landlords continue to take steps to bolster their financial position, with debt still barely over one third of average portfolio value and mortgage payments as a proportion of rent down from 27 per to 25 per cent.

Paragon director of mortgages 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.”

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