Latest figures show that the number of rental properties mortgaged by British landlords has increased over the last three months. Not only that but the research from Paragon shows that landlords with bigger portfolios are more likely to add to their portfolio of houses by investing further in new properties.
What is a portfolio landlord?
A portfolio landlord refers to a landlord who has four or more mortgaged Buy to Let UK rental properties. Like how a portfolio of work refers to a collection of works, a portfolio in landlord terms refers to a collection of properties a landlord has to rent out to others.
It may be a property for a single tenant or it could be a House in Multiple Occupancy (HMO) which refers to a property where several people pay rent to share a house’s facilities. This means that a family-sized house could be lived in by several people all paying rent rather than a single rent payment from a family.
Landlords are increasing the number of properties in their portfolios
With all those properties already, you might be forgiven for thinking that these landlords might consider quitting while they’re ahead with more properties to manage and more paperwork to stay on top of.
However, the latest figures show an increase in the number of properties in a landlord’s portfolio increasing from 12.7 to 13.1 properties in the last three months. Investment in HMO properties is rising too.
The number of landlords with between 11 and 20 properties increased from 14% to 18%. This gives rise to higher average portfolio values, rising from £1.68 million to £1.76 million.
Investment increase not likely to end any time soon
As well as collating data on the confirmed activities of landlords, the research looked into the actions landlords were considering taking in the future.
11% of landlords with larger and valuable portfolios are considering a property purchase in the next quarter in comparison to the 4% of landlords with smaller portfolios.
The number of landlords considering buying HMO properties rose from 5% to 20%.
It shows that landlords have not yet been put off by uncertainty in the property market caused by Brexit and more specifically by the higher taxes landlords face for renting out properties.
Despite the increase in interest, only 13% of landlords are optimistic about the future.
With landlords facing increasing tax costs, many landlords with small portfolios may feel it would be risky to invest in more property. There is a certain balance of risk and reward for landlords when it comes to further investment in their portfolios.
For landlords with bigger portfolios, the increase in interest in HMO properties is particularly telling to the increase in investment. Properties with more occupants paying rent to provide a boost to a landlord’s income where multiple people pay rent for a house rather than a family paying as one.
The added income from HMOs can help to improve a landlord’s financial position especially as lower rental payments cover less of the mortgage repayments for the landlord than before.
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Property page updated on 29th April 2021 by James Bougon