UK landlords are showing increased caution in expanding their buy-to-let portfolios, with over half currently not planning to purchase additional properties. This cautious stance reflects broader economic uncertainties and a stabilisation of confidence within the landlord community, according to the latest survey by specialist lender Landbay.

Landlords Hesitant to Expand Portfolios

Landbay’s recent landlord survey reveals that 52% of landlords do not intend to buy another property at present, signalling a pause in buy-to-let investment activity. Despite this, 35% of respondents still plan to grow their portfolios within the next 12 months, indicating a split in landlord sentiment.

When asked about their outlook, 41% of landlords described their prospects as neutral, 21.8% were positive, and 36.8% held a negative view. The mood was notably more pessimistic regarding the UK economy, with 69.2% expressing a negative outlook, 27.1% neutral, and only 3.8% positive.

Confidence Stabilises Amid Market Challenges

Rob Stanton, Landbay’s sales and distribution director, commented on the findings: “The key difference compared to the results of our previous survey is that sentiment and confidence appears to have stabilised, even during a somewhat turbulent few months, particularly when it comes to product availability and rates.”

He further explained that landlords remain confident in their own property businesses despite scepticism about the wider economy. “Landlords, for the most part, appear to be very confident about their own property businesses, and the future of their investments, even when their views on the future performance of the wider economy remain far more sceptical.”

Stanton added that landlords are focusing on factors within their control, making clearer decisions about buying, selling, or holding properties. This strategic approach aims to maintain portfolio profitability amid uncertain economic conditions.

Reported Yields and Rent Adjustments

The survey highlighted variability in reported gross yields across landlord portfolios. Some 27% of landlords reported yields between 4% and 6%, 22% achieved yields from 6% to 8%, and 16% reported yields of 10% or higher.

More than three-quarters of landlords intend to increase rents in some capacity over the next year. This trend towards rent rises coincides with more flexible rent-setting approaches, influenced by the introduction of the Renters’ Rights Act. Landlords are now balancing cost pressures, legal responsibilities, and tenant affordability when determining rent levels.

Preference for Fixed-Rate Mortgages

When considering their next mortgage, landlords overwhelmingly favour fixed-rate borrowing. The survey found that 87% would opt for a fixed-rate deal of two, three, or five years, with 47% specifically choosing five-year fixes. Tracker mortgages are far less popular, with only 6% likely to select this option for their next buy-to-let mortgage.

Additionally, 83% of landlords used a mortgage broker from the outset for their last buy-to-let mortgage, while 10% started the process independently before engaging a broker to complete the deal. This reliance on brokers underscores the complexity of mortgage arrangements in the current market.

What this means for landlords

The cautious approach to new buy-to-let investments reflects a landlord community adapting to economic uncertainty and evolving regulatory requirements. With confidence stabilising but economic outlooks remaining subdued, landlords appear to be prioritising portfolio management and profitability over expansion.

The preference for fixed-rate mortgages suggests landlords are seeking certainty in borrowing costs amid fluctuating interest rates. Meanwhile, the move towards flexible rent-setting demonstrates responsiveness to tenant needs and legal changes, which could help sustain tenancies and income streams.

Overall, landlords are making more deliberate decisions, focusing on what they can control to navigate a challenging market environment.

Source: Based on reporting from Property118

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TLA update

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