It is a time of tremendous change for landlords in the UK - and tremendous opportunity. Against the backdrop of regulation, new tax regimes and falling yields, property owners are positioning themselves for growth or exit.
We wanted to find out more about the former - and see who is adapting to the new conditions, and set to survive and thrive in the coming months and years.
Speaking to 500 landlords across the nation, we found a separation amongst two groups of landlords when it came to planning their future.
Many people who became landlords by accident and have only one investment property are maintaining what they have, while a small minority feel prompted to sell.
But those with two or more properties thought that changing external factors would benefit them and are ramping up their investments. Indeed more than a third (38%) of those landlords plan to buy at least one more property in the next year. Undeterred by changes, not one of the landlords with more than five properties that we spoke to plans to shrink their portfolio.
Almost two in three of the 500 landlords we spoke to (66%) saw no impact from external factors - including Capital Gains Tax (CGT), new licensing laws, and increased stamp duty -on their investment strategy.
We found that, the bigger the portfolio, the more positive both the impact of external factors and in turn, the overall outlook. Landlords either positioned at the larger end of the market, or aspiring to get there, seem to be unfazed by perceived market conditions - or are at least building their business to weather them.
Around 70% of the market are small, often accidental, landlords. And we’re now seeing a huge gulf emerge between them and the professional investors who are making up the rest of the market. There are the people who see themselves as a business, and the people who don’t - who are just a landlord. The business people are going to thrive, and the small guys probably aren’t. Their receptors aren’t out, they’re not on top of the market or the legislation or the regulations, or what’s coming their way. It remains to be seen whether they have the equity to be able to leave the market entirely, but I think those that can almost certainly will. That could end up being a good thing for the market, and a good thing for tenants.
It surprised us to see the amount of buoyancy in the private rental sector, and when we dug deeper it was clear that there is a new breed of landlord emerging in what’s become a new and very different market. They tend to be bigger, younger, and more ambitious. Learning who they are and how we could support them became the focus of the rest of this report.