Many landlords have more than one property in their buy-to-let portfolio, and the private rental sector has been steadily growing for the past couple of years, which means many landlords look to add further properties to their buy-to-let property investment. However, new figures from the latest index show that there has been a sharp decline in the number of landlords looking to expand their buy-to-let portfolio in the first quarter of 2017.
The index, collated and published by BM Solutions, a part of the Lloyd’s Banking Group, found that only 13% of landlords in the UK are currently planning to buy more rental properties for their portfolio, which represents the smallest proportion size in over 11 years. The survey also found that fewer landlords are experiencing rent rises with 48% experiencing rent rises in Q1 2017, compared to 53% in Q4 2016. What’s more, 42% of landlords have increased rents, down 3% on the last quarter, while 32% are expected to increase rents over the next 6 months, down 5% on Q4 2016.
The news that landlords are purchasing fewer properties will come as a concern for many letting and estate agents, and possibly for people looking to sell flats and apartments (common buy-to-let properties), and the survey indicated that there could be a few reasons for the decline. The survey said that the recent tax changes, such as the removal of mortgage tax relief, and the increase in the percentage of stamp duty tax paid on second properties could be forcing landlords to shelve any expansion plans.
However, the survey also suggested that tenant demand could be playing a part in the decline; tenant demand declined further in Q1 2017, with around 17% of landlords reporting a significant fall in tenant demand, especially in central and outer London.
The survey painted a rather negative picture of the current state of the private rental market, and yet, landlords are feeling optimistic that the UK’s financial market has more than doubled in the past 12 months. Landlords are also increasingly confident in their lettings businesses, with confidence levels among landlords at similar levels seen in the first quarter of 2016. Landlords in the South East of England were most confident, with 47% feeling ‘good’ or ‘very good’ about their prospects, however, only 26% of landlords in Scotland and Wales said they felt positive about their own personal lettings business.
Overall, while many landlords are optimistic about the state of the rental market, fewer landlords are optimistic about their own business, which means many landlords are not expanding their buy-to-let portfolio, with many landlords hesitant to make such as significant purchase with fear of losing out in the long term.
If you’re a landlord based in Cardiff, as Cardiff’s largest estate and letting agent, we can help you rent out your buy-to-let property or help you purchase your next buy-to-let investment. To speak with one our experienced lettings team, get in touch today on firstname.lastname@example.org, pop into our Woodville Road office in Cathays, or give us a call on 02920 668585.