Portfolio Additions, Consolidation and Diversification
Landlords are constantly adapting to conditions in what remains an ever-evolving buy-to-let marketplace, but some old concepts still ring true – the importance attached to location and rental yields.
When it comes to regional variations, it currently appears that landlords based in the Midlands are most likely to increase their portfolio size. This is according to a study conducted by BVA BDRC, which outlined that 24% of landlords in the East Midlands and 22% in the West Midlands plan to purchase more properties in the next 12 months. Meanwhile, 8% of landlords in South West and 9% in Central London intend to purchase more properties within the same timeframe. Overall, the data shows that 14% of landlords intend to purchase property, with the average preparing to buy three properties.
Focusing on property type, 52% of those looking to expand their portfolio intend to do so by purchasing a terraced house. This was followed by semi-detached properties at 32% and flats at 26%. Furthermore, one in four landlords is said to be targeting HMO. When it comes to financing these purchases, nearly two thirds (63%) of landlords plan to do so via a buy-to-let mortgage, while 17% intend to do so through releasing equity on existing properties, and 18% said they would purchase a property outright.
There are always trends emerging across the BTL sector, some of which are generated organically and some of which are a result of regulatory conditions and government intervention. In addition to location and rental yields, another common denominator of the modern BTL sector is that all landlords should undertake full due diligence and seek good, professional advice when it comes to adding to, consolidating or diversifying their portfolios. And this focus on adapting portfolios to meet any market trends and challenges will continue to be at the forefront of all landlords’ minds in the future.