Portfolio Expansion in the Buy to Let Sector Sees Decline

The number of investment landlords aiming to expand their buy to let portfolio has seen a sharp decline, according to the latest quarterly index from BM Solutions.

13 per cent of landlords are currently looking to expand their portfolio, marking the smallest proportion since the beginning of the survey 11 years ago. The firm, which acts as the buy to let branch of Lloyd’s Banking Group, attributed the decline to the recent tax changes. However, a plateau in tenant demand was also considered a contributing factor. 17 per cent of landlords reported a slowing in demand, especially in central and outer London.

However, this has not dampened landlord spirits, with confidence in the buy to let sector remaining stable. The proportion of landlords feeling optimistic about the UK’s financial market has more than doubled over the past year. Confidence regarding the buy to let sector, rental yields and capital gains is currently on the rise.

Landlords in the South East are most optimistic about their business prospects, with 47 per cent feeling ‘good’ or ‘very good’ about their situation. In contrast, those in Scotland and Wales felt the least positive, with just 26 per cent citing optimism.

42 per cent of landlords have increased rents across their own portfolio in the last year, down 3 per cent on Q4 of 2016. 32 per cent intend to raise prices in the next six months, a 5 per cent decline on Q4.

Head of BM Solutions, Phil Rickards, said: ‘Despite signs of landlord confidence stabilising this quarter, fewer landlords are feeling optimistic about the prospects for their own businesses. This has driven down the number of those looking to expand their portfolio further to a new all-time low despite the average portfolio creeping up slightly. The impact of the tax changes has a natural link to landlord confidence, as the market landscape continues to be reshaped by changes in regulation.’

 

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