In a promising sign for the buy-to-let (BTL) market, data from Paragon Bank reveals that almost four in 10 portfolio landlords are set to expand their property portfolios this year. The findings, presented in the Portfolio Landlord Report 2024, shed light on the intentions and strategies of experienced landlords with four or more properties.
According to the survey, 37% of portfolio landlords are gearing up for property acquisitions, with the majority eyeing strategies such as releasing equity from existing properties (55%) or utilizing existing capital (58%) to fund their purchases. The report further outlines that 69% of those planning to add properties are doing so as part of a deliberate portfolio expansion strategy, driven by factors like long-term demand for rental properties (60%) and retirement planning (50%).
The survey reveals that 61% of landlords intend to finance their acquisitions with a mortgage, while 39% plan to make outright purchases. Property preferences among investors are also highlighted, with 52% favouring terraced homes, 46% opting for semi-detached properties, and 26% showing interest in individual flats.
Paragon Bank’s Managing Director of Mortgages, Richard Rowntree, expresses optimism about the future of the BTL market based on the survey results. Rowntree notes, “Portfolio landlords are optimistic about the future of the BTL market and are looking to take advantage of the opportunities that arise in 2024.” He emphasizes the role of remortgaging existing properties as a means for landlords to diversify portfolios, increase rental income, and secure long-term financial goals.
The report also highlights a strategic shift among portfolio landlords towards properties offering higher yields. Approximately 21% of surveyed landlords plan to invest in houses in multiple occupation (HMOs), while 20% are eyeing properties that can be converted into this type of rental. Rowntree emphasizes the attractiveness of HMOs, stating, “Houses in multiple occupation are one of the most attractive options for portfolio landlords, as they can generate more income per property and reduce the risk of void periods.”
However, Rowntree cautions that managing HMOs involves additional responsibilities and compliance, underlining the need for specialist lenders who can understand the unique needs of portfolio landlords and provide tailored solutions. As the market continues to evolve, these insights into the strategies and preferences of portfolio landlords offer valuable perspectives on the trajectory of the BTL sector in 2024.