Today’s Bank of England interest rates rise will continue to impact on the profitability of buy to let (BTL) investments, but most landlords continue to take a long-term view and are prepared to weather the storm brought about by rising mortgage rates.
In mid June, Leaders Romans Group (LRG) surveyed landlords of 380 privately rented properties who are registered with LRG estate agency brands Gibbs Gillespie, Leaders, Hose Rhodes Dickson, Moginie James, Portico , Romans and Scott Fraser, across all regions of the UK.
The research clearly demonstrated that landlords remain positive about the market: 68% plan to maintain their portfolio over the next year, and 6% plan to expand it.
Of the 10% who plan to sell their portfolio, only 25% cited the economy (interest rates, energy costs, lack of disposable income) as the reason for doing so. This is a reduction of 4 percentage points in the numbers planning to sell because of economic factors when the same research was carried out in February.
The economic factors of supply and demand present an opportunity for landlords. Asked to select the three best opportunities for landlords at present, 75% (a substantial increase from 29% in February) selected ‘A shortage of rental properties in my area’ and 62% (an increase from 44% in February) chose ‘Increased rental yields present a real opportunity to landlords’.
Commenting on the research, Allison Thompson, National Lettings Managing Director of Leaders Romans Group said, ‘Contrary to some of the headlines, we are seeing increased demand and ongoing confidence from our landlord clients, who believe that the sector remains a good investment. We support this by working closely with landlords to understand their individual investment priorities and to tailor our advice, whether that be on mortgages (through Mortgage Scout), in utilising proptech such as property portals for all our clients to instantly access up to date information, and offering specific services such as Smart Investment which helps landlords easily create limited companies.’
As for the future of property as an investment, responses to LRG’s final question, ‘Which is a better investment for retirement?’ make this abundantly clear: 61% selected ‘property’ and only 39% selected ‘pension’.