26% of UK Buy-to-Let Landlords Confident to Increase Property Portfolios

As we head towards the end of 2023, it is clear that the market has performed admirably, given the awful hand it dealt. Following the pandemic, the Ukraine war and the Liz Truss mini-budget fiasco, inflation and interest rates went soaring. Many forecasters assumed the worst for the UK property market. But, like always, the market defied expectations.

The most recent Halifax Index showed that monthly property price growth had increased for a second month in a row. Nationwide also showed that prices had risen for the third time this year, indicating that the market is moving in the right direction.

Therefore, we should not be too surprised to see buy-to-let landlords trust in the market again and want to make new property investments.

Recent research from Butterfield Mortgages shows more than a quarter of buy-to-landlords are preparing to add new homes to their portfolio as part of their property investment strategy within the next year.

Let’s look at the research in more detail.

According to Butterfield Mortgages, the number of landlords who plan to add new homes to their portfolio dwarfs those who are planning to sell. The study shows that 26% of landlords had set their sights on expanding in the property market, while one in 14 was ready to reduce the number of properties. These figures indicate that a good portion of landlords currently in the market continue to regard property as one of the safest investments.

The research involved an independent survey of 2,000 people across the UK.

In the survey, 67% of landlords said they would not be selling or buying any more properties, choosing to forego cheaper properties over the next year. While some landlords are waiting to see what happens with mortgage rates and house prices, sky-rocketing rents and huge tenant demand may be enough to tempt some savvy investors into the market, particularly in places outside of London – such as Liverpool – that are much cheaper than the national average.

With only 7% of landlords shrinking their portfolios, the UK buy-to-let market still appeals to many buy-to-let investors, whether investing for monthly income or saving for their retirement.

After all, inflation has fallen steadily throughout 2023, and the Bank of England’s base rate halt means mortgage lenders can trust the market enough to lower their rates and remain competitive among their peers.

Speaking of interest rates, the Butterfield Mortgages landlord study showed that nearly half of landlords struggled with rising interest rates. Yet only 37% of landlords felt they needed to increase their tenant’s rent.

However, as mortgage and interest rates show some stability, 69% of landlords said they would increase rent prices in 2024, searching for even higher gross rental yields than was already possible. The current demand and supply imbalance in the UK market means tenants are paying premium rental prices in the private rental sector. With rents expected to rise another 6% in 2024, landlords stand to enjoy a substantial ROI through buy-to-let property investments, especially if they invest in an area with good-value properties and healthy rental yields. For example, the North West enjoyed 11% rental growth over the last year.

Alpa Bhakta, CEO of Butterfield Mortgages, said:

“For the best part of a decade, speculation has been rife that landlords will quit the BTL market in their thousands. However, our data is the latest to challenge such predictions, showing that the vast majority of private landlords remain committed to either maintaining or growing the size of their property portfolios. It underlines the enduring appeal of BTL as an asset class, even despite added costs and regulatory complications for many.”

If you are an investor looking to buy property to let, buoyed by the optimism of fellow landlords, consider checking out some of our helpful buy-to-let articles for different UK areas, such as our buy-to-let Birkenhead and buy-to-let Leicester guides.