2019 has been a rollercoaster year for property investors and with the uncertainty of Brexit feeling like it is just around the corner, this is unlikely to change anytime soon. According to Paragon, Landlords are remaining cautions when considering expansion of the property portfolios even with an outlook of tenant demand booming.
Only 8 per cent of landlords planned to make purchases in the next three-month period, while 22 per cent intended to sell during the same period, indicating a lack of willingness to commit to further market activity just yet. The average portfolio size has grown slightly to 13.2 properties, while portfolio values among the average landlord in this group totalled £1.82 million, which is an all time high.
Our Outlook
The UK government have spent the past few years targeting Property Landlords which we believe was a conscious decision to professionalise the industry and eliminate the “Accidental Landlord”. This appears to have worked as a recent survey indicated that 10% of large-scale landlords are planning to expand their portfolios in the remainder of 2019 compared to less than 1% of small-scale landlords. Gearing on property portfolios remains at an all-time low at 33% LTV as do average mortgage payments as a proportion of rent which is 25%.
The introduction of Article 4 across many of the UK’s towns and cities has slowed the rapid expansion of the HMO industry and investors seeking to make a quick buck! This strategy continues to remain a lucrative option for many investors but needs to be approached in a more calculated manor.
We believe that investing in “bricks and mortar” will continue to be a high return investment for landlords who have done their homework and really understand their local market and customer well. We are continuing to source single-let properties that are returning +7% yields and +15-20% ROI which is rarely seen across other investment platforms.
In conclusion, the UK as a whole cannot build enough housing for the expanding population to live in so the boom in demand for rental properties is unlikely to slow in the foreseeable future. We believe that the current economic climate will present excellent opportunities for astute investors to grow their portfolios and continue to make a strong return providing that they are willing to adapt their strategies accordingly.
Happy investing and have a great weekend