Professional landlords are determined to remain in the private rental sector and are undeterred by regulatory changes, a lender’s survey has found.
Handelsbanken’s fifth annual Property Investor Report, a survey of 200, was carried out after the war in Iran began. It revealed that buy-to-let (BTL) investors still wanted a stake in the market and saw opportunities for growth.
According to the survey, 93% of respondents expect their portfolio value to increase over the next 12 months, while 84% plan to increase their holdings. This was significantly higher than the 54% who said the same in last year’s survey.
Just 1% of respondents said they would leave the market within the next year.
Handelsbanken said this indicated a more professionalised private rental sector and landlords would need expertise on how to scale, adapt to regulation, manage costs, geopolitical uncertainty and tenant affordability pressures.
Of those planning to expand their portfolio, 70% said this was due to buying opportunities or valuations, while 58% pointed to strong tenant demand and 33% cited the availability of finance. This comes after research by Hamptons showing that landlords were acquiring properties from other investors.
Conversations you need to have with landlords before the Renters’ Rights Act
Sponsored by BM Solutions
The PRS will look different
James Sproule, UK chief economist at Handelsbanken, said: “Our survey suggests there has not been a notable exodus of professional investors from the UK property market. Instead, landlords are adapting to a more challenging environment by becoming more selective, more operationally disciplined and more focused on scale.
“The Renters’ Rights Act, higher costs and geopolitical volatility are all making property investment more complex. That does not mean professional investors are walking away, but it does mean the sector is likely to look different, with larger and more strategic landlords better placed to absorb cost, manage risk and take advantage of opportunities.”
More discipline and strategy
Handelsbanken said the survey showed that landlords not only had confidence in the sector, but were becoming more operationally disciplined.
Respondents acknowledged that the market had become more complex, with 59% saying they would tighten their tenant selection criteria, and 59% would invest more in the condition of a property or its amenities. Some 44% were considering raising rents sooner than planned because of the Renters’ Rights Act.
It said professional landlords were behaving more like larger businesses, with clearer operating models, tenant strategies and investment plans.
Just 26% said they were thinking about selling some or all of their properties, and just 3% said they would pivot to a different sector.
Brian Lehane, corporate account manager at Handelsbanken Northampton Branch, said: “Our report highlights that the majority of investors are looking to grow their portfolios despite the economic challenges that persist, and we are seeing that translate to increased activity in our region and optimism for future prospects.
“With key metrics continuing to hold up, particularly capital values and rental growth, Handelsbanken continues to support growth aspirations with flexible funding solutions.”