Amidst the current cost of living crisis and rising rates, how confident are landlords, and how is this impacting their investment decisions? New research shows what action property investors intend to take in the next year and what they anticipate for the housing market.
New research from Handelsbanken reveals that small- to medium-sized enterprise (SME) landlords plan to grow their portfolios in the next year, as confidence in property as an investment continues to thrive. This comes despite the fears of an economic recession, the cost-of-living crisis, and concerns over house prices dropping in the near future.
The study revealed that, of the professional landlords questioned (those owning at least four properties), nearly half (49%) intend to purchase more properties. Of this group, 8% also plan to invest in improving the quality of their portfolio. The research shows an undoubtable confidence in property as a worthy and long-term investment, with 35% looking to maintain their current properties, and just 7% planning to sell some or all their properties.
The supply and demand disparity continues to play a major role in the property market’s future: 86% of landlords expect demand for residential property to increase in the next year, and 63% expect commercial properties to follow the same trend. It is these levels of demand that maintain the record-high house prices and rental price growth that we have seen already in 2022.
What and Where do Landlords Intend to Purchase?
The motivation behind landlord purchasing intentions can be attributed to diversifying portfolios across regions and property types. Of the 73% whose plans focused on branching out into new areas of the market, the most popular property choices included:
- 66% hope to purchase houses
- 38% are considering flats
- 34% are looking into HMOs
- And 32% are considering commercial retail units
Interestingly, recent research by Paragon Bank found that 43% of existing HMO landlords intend to purchase another in the next six months, due to increasing demand and yields.
On a regional basis, the most popular and sought-after location for future investments was, perhaps surprisingly, London (53%), followed closely behind by the East of England (40%), and the East Midlands (22%).
James Sproule, the Handelsbanken UK Chief Economist, noted how “property has shown its resilience against economic doom and gloom and the cost-of-living squeeze”. He continued: “Landlords are anticipating that a shortage of rental properties will help keep prices buoyant, particularly as working patterns continue to adjust to the post-pandemic world and people seek to move back to the big cities”.
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12th August 2022