Five times as many multi vs. single property landlords (25% vs. 5%) are in acquisition mode because of external factors. Almost half of the latter are neither sellers nor buyers, and do not feel impacted by any changes.
11% of landlords with two to four properties plan to shrink their portfolios; over half of them because of external changes. 22% of landlords between two and four properties, however, intend to expand based on external influences, suggesting the impact on this particular segment is more complex.
Have external factors influenced landlords' investment plans?
Have these external factors changed your investment strategy? (Overall)
More people (11%) see opportunity to expand than reason to sell up (7%) from various tax and legal changes.
By contrast, amongst those who own at least five properties, we note that not one intends to sell - but over half (51%) intend to buy.
Overall, only 3% of landlords said they were aiming to exit the market in the next 12 months, a marginal increase on the previous year. More landlords intend to increase the size of their portfolios. (67% > 70%).
And despite the government’s plans to cut tax relief on buy-to-let mortgage payments, 66% of landlords say it makes no difference to their plans - only a modest decline from 70% in 2016.
Year on year, the proportion of landlords who deliberately entered the market fell slightly from 63.4% to 62.5%. 8% of landlords have less than a years’ experience, down from 11% in 2016.
The proportion of landlords hoping to generate return via rental yield fell from 58% to 50%, despite rents remaining steady year on year.
Appetite to invest in buy-to-let as part of a pension fund has also increased year on year, from 82% to 86%.
At the macro level, the prospect of Brexit has had scarcely any impact landlords’ on investment appetite. Over four in five of our customers told us it would not impact their strategy - the same figure as in 2016.
It’s actually really heartening to see that despite the very real challenges facing the market - from Section 24 to Brexit - landlords are proving to be remarkably constant and resilient. More people are planning to grow than to shrink - and that’s got to be a good thing for the sector. Our year on year results seem to show a small but significant decline in accidental and new landlords - again building the picture of an emerging, professional landlord - and it’s those bigger and growing landlords that are driving forwards, and driving the market forwards with them.
I think landlords are increasingly playing a longer game - and it’s almost inevitable that those who do are going to be in it longer-term. Simple’s research shows that people are looking less at rental yield and more at investing for their pension and their future. Certainly fewer people that I meet seem to be planning to give up their day job in favour of investment - rather they’re seeing property investment as supplementing their income and future-proofing their finances.