The number of landlords with portfolios of between six and 20 properties across the UK increased in the first three months of this year, as confidence remains high in the buy-to-let market.
As landlords have been dealing with recent regulatory changes and mortgage rises over the past few months, many industry experts had predicted a slowing of the buy-to-let market with landlords being deterred from investing, but the most recent figures from Paragon suggest otherwise.
According to the specialist lender, the number of portfolio landlords with six to 20 properties saw a hike in the first quarter of 2018 from 35% to 39%, although those with more than 50 properties have reduced from 6% to 4% of the overall market.
Polarisation between big and small landlords
Meanwhile, the number of smaller landlords who own three to five properties has fallen slightly, according to the statistics, from 26% to 24% in the first three months of the year – which could indicate that they are actually increasing the number of properties they own to push them into the next bracket of large portfolio landlord.
John Heron, managing director of mortgages at Paragon, commented that the behavioural changes of landlords was being influenced by the recent tax and regulatory adjustments, with the “polarisation between small landlords and those with more substantial portfolios beginning to emerge”.
“Our own experience highlights that landlords with larger portfolios need access to products that cater for landlords with more complex requirements and broader underwriting expertise, increasing the role for specialist lenders in the buy-to-let market,” he added.
How landlords can beat the changes
One of the ways landlords are adapting to the changes is by shrinking the size of their portfolios to reduce their risk. Overall, the average number of properties held by portfolio landlords has seen a slight decrease from 13.1 to 11.6 properties per landlord.
Meanwhile, 26% said they planned to sell some or all of their properties in the next quarter, which is a slight rise on the 22% who said they would do so in the previous three months. Almost a quarter of landlords in the study (24%) had increased their rents during the time period, another indication that some landlords are taking measures to make up for any cost shortfalls brought about by recent changes.
Overall, the fact that the number of big property investors with large portfolios is on the rise demonstrates the strength and confidence in the current market, and those who are able to find ways to overcome the regulatory pressures will find their profits unaffected by the current climate.