Landlords Want to Buy, Not Sell

Results from a new landlord survey show growing confidence in the buy to let market. This article examines the findings and explains what this means for the industry.

What are buy to let landlords planning in 2021?
According to Paragon’s survey of 900 landlords, 19% are looking to purchase new property over the coming year. Significantly, it’s the first time in four years that more landlords are looking to buy than sell (17% are looking to sell), which indicates that there’s genuine positivity in the industry at the moment.

The granular results of this survey are also fascinating. Not only are those looking to purchase considering (on average) buying two properties, but the largest group of landlords planning to acquire property are those with 11-19 buy to let properties already (31%). 28% of landlords with 20+ properties are looking to add to their portfolios too. The survey also revealed that landlords have experienced a significant increase in tenant demand over the last three months, which is likely to fuel investors confidence over the coming months.

Where are landlords buying in 2021?
While the percentage of those looking to increase their buy to let property portfolios are mostly evenly spread across the UK, those investing in the East Midlands and North West stand out at 26% and 24%, respectively. With lower property prices, steady rental demand, healthy average yields, plus the stepped stamp duty extension, it’s no surprise!

At the other end of the table, only 13% of landlords investing in Central London are looking to purchase over the coming year, with the majority here looking to sit tight until things settle down. Hopefully, landlords here won’t have to wait too long; Zoopla recently revealed that city centres across the UK have seen tenant demand increase since Easter. Rent rates here have suffered the most over the pandemic, so hopefully, this will start to drive them back up.

How are landlords purchasing in 2021?
According to the survey, investing via a limited company is now the investment method of choice by far, with 47% of investors intending to purchase via a limited company. While seemingly a clear majority, 35% still plan to invest as an individual.

61% said they would take a buy to let mortgage to fund the purchase, while 18% intend to release equity from existing properties to generate purchase funds. Depending on the available equity in your existing portfolio, capital raising through a remortgage is a common and straightforward way to form a deposit for further property purchases.

All in all, the survey reveals a confident industry and demonstrates that many landlords recognise that with house prices predicted to continue to rise long past the stamp duty deadline, now is as good a time as any to expand your buy to let portfolio.

The next steps
Competition for good properties is hot, so getting your finances in order before you go out property shopping is essential. Not only can we arrange a Decision in Principle (DIP), we can complete a free portfolio review to assess whether you can capital raise to fund purchases. A lot of our clients are also opting for bridging finance to speed up the purchase process, which then gives you time to refinance onto a buy to let mortgage once you’ve secured the property.

If you’d like to chat through your possible options, do give us a call on 0345 345 6788, or submit an enquiry here.