Professional Landlords Expand Portfolios Despite Market Challenges

Recent research from Shawbrook highlights the resilience of professional landlords in the UK property market, with a significant number actively expanding their portfolios despite current market uncertainties and high inflation. According to the study, nearly 9 in 10 (88%) portfolio landlords, defined as those with over five buy-to-let (BTL) properties, have added to their portfolios in the last six months. This contrasts with smaller landlords, who own between one and four rental properties, of whom only 58% have expanded their holdings in the same period.

The survey, which involved over 1000 residential landlords in the UK, further reveals that a quarter (25%) of portfolio landlords plan to invest in an additional property in the next year, and one in five (22%) are looking to purchase multiple properties. These landlords are not only expanding but also diversifying their portfolios, with 39% exploring different locations and 37% considering various types of residential properties. Notably, 26% are turning towards student housing, while 21% are eyeing the retirement housing market.

This trend occurs against a backdrop of high demand and low supply in the UK’s rental market. September 2023 saw rental home demand at 51% above the five-year average, with available homes 30% below average. Rising mortgage costs have sparked concerns about landlords selling rental properties, potentially exacerbating the market’s challenges.

Shawbrook’s research, however, underscores the commitment of professional landlords to the market. A notable 33% of those diversifying their portfolios are doing so in response to tenant demand, and 28% are focusing on more energy-efficient buildings.

Emma Cox, Managing Director of Real Estate at Shawbrook, comments on the findings: “Whilst the property market remains challenging, it’s encouraging to see professional landlords continuing to invest and seek opportunities to diversify… Our research has shown that a significant number of landlords have taken proactive steps to expand their portfolios, while responding to demand to add quality, energy-efficient rental stock to the market for renters.”

She also emphasizes the importance for buy-to-let landlords to explore external financing options and work with specialist lenders. Cox suggests that to sustainably meet buyer needs, savvy landlords should remain adaptable, continuously adjusting their strategies to navigate the evolving real estate landscape.