BTL landlords are shrinking portfolios despite rising rents

BTL landlords are shrinking portfolios despite rising rents

0:07 AM, 5th April 2024, About 9 months ago 33

Text Size

Buy to let investors in England and Wales are reducing the size of their portfolios, despite healthy rental income growth, research reveals.

According to Open Property Group, which analysed data on portfolio sizes and profitability, the average investor now holds 8.5 properties, a 1.6% year-on-year decline.

However, the regional variations are stark with Yorkshire and the Humber seeing the biggest portfolio shrinkage, with the average landlord now owning nine properties, a 27% decrease.

The West Midlands and South West also witnessed significant reductions of 19% and 13% respectively.

Portfolio sizes grew in outer London, the North West, South East and Wales.

‘Much has been made about the landlord exodus’

The firm’s chief executive, Jason Harris-Cohen, said: “Much has been made about the landlord exodus in recent times and it’s fair to say that the severity of this trend has been largely exaggerated.

“However, the figures do suggest that while buy to let investors may not be exiting completely, they are reducing the size of their rental property portfolios.

“In fact, buy to let investors are accounting for an increasingly larger segment of sellers looking to utilise the quick sale route, as they look to off-load part of their portfolio with minimum fuss or stress, having benefited from years of rental income and capital appreciation.”

He adds: “With a reduction in capital gains tax fast approaching, we expect more investors will look to streamline their portfolios given that the cost of existing is set to reduce and who can blame them?”

The trend of landlords shrinking their portfolios

The quick sale firm also found that the trend of landlords shrinking their portfolios coincides with an average rental income increase of 8.8%.

Yorkshire and the Humber again leads the way with a jump of 30.9%.

However, a closer look reveals a potential cause for the downsizing – declining profit margins.

Open Property says that rental yields have dropped by 1% in the North West and central London, suggesting rising costs are squeezing returns.


Share This Article


Comments

GlanACC

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

20:16 PM, 5th April 2024, About 9 months ago

Reply to the comment left by Michael Booth at 05/04/2024 - 19:51
CGT didn't bother me when I sold some of my properties. I bought one at £36,500 and sold for £155,000. The CGT was split between the wife and myself and yes it was a lot of money, but we still made a decent pot. I still have 2 properties as a partnership and 4 inside my LTD company

NewYorkie

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

22:37 PM, 5th April 2024, About 9 months ago

Reply to the comment left by Michael Booth at 05/04/2024 - 19:51
Just as well my property has no CGT liability right now! 🤣

Cider Drinker

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

9:20 AM, 6th April 2024, About 9 months ago

The loss of FHL rules makes furnished holiday letting less attractive. However, the RRB makes furnished holiday letting more attractive.

This government really has lost the plot.

NewYorkie

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

10:32 AM, 6th April 2024, About 9 months ago

Reply to the comment left by Cider Drinker at 06/04/2024 - 09:20
Many FHL owners will be higher rate taxpayers, and will have mortgages on them. If they have to start paying council tax at double or even triple rate, and lose their tax benefits e.g. subjected to S24, their profitability will be hit hard.

Cider Drinker

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

16:17 PM, 6th April 2024, About 9 months ago

Reply to the comment left by Mary Afolabi at 05/04/2024 - 19:22
Yes, that is true.

On a brighter note, rent increased by 15% and other properties are in profit. Mortgage will be paid off when I sell one that I’m doing up after the tenant ‘left”.

This one has made a loss for three years but shouldn’t need much more doing to it.

Cider Drinker

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

19:15 PM, 6th April 2024, About 9 months ago

Reply to the comment left by NewYorkie at 06/04/2024 - 10:32FHL owners would probably be just as likely to be higher rate taxpayers as BTL Landlords. Of course, interference by an incompetent government will have made some BTL landlords switch to FHL.
Even with the loss of FHL status,, I think FHl will be more attractive than BTL post RRB.

NewYorkie

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

19:29 PM, 6th April 2024, About 9 months ago

Reply to the comment left by Cider Drinker at 06/04/2024 - 19:15
BTL landlords have grown accustomed to being hit from all sides, and many have had enough, and many simy can't afford to stay.

FHL owners [I was one 24 years ago] have had it easy, which has encouraged so many to invest on recent years, egged on by the view that 'staycation' is the way forward. They are now on the wrong side of the narrative, and will be hit from all sides.

I was planning to go for FHL last year, but there are so many in York, I just felt it was ripe for the picking, and sold up for a healthy gain instead.

Cromerty

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

20:34 PM, 6th April 2024, About 9 months ago

Reply to the comment left by Cider Drinker at 05/04/2024 - 19:01
Agents are useful for several reasons. 1) better and more financially secure tenants choose to rent through reoutable agents. 2) no direct contact between landlord and tenant, keeping it professional and lessening requests for late payment of rent etc. 3) much less stress when there is a someone between you and the tenants to sort out problems (the lack of stress alone is worth the fee) . 4) building a good relationship with your agents means they will prioritise you at renewal time when good tennents come through the door. 5) regular agent checks and photographs of the property ensure tenants keep the place clean and tidy. 6) regular reminders from the agents of my obligations as a landlord such as licencing renewals, utilities checks etc. This prevents me from breaking the law by unintentionally missing key dates.

In all my years of being a landlord, I have never had any issues with my tenants. There have been no repairs other than routine, no late payments, no goods left behind, no clearances, no unpaid utilities bills, no complaints from the neighbours and no complaints to myself. I put all this down to my excellent agents. Looking at shocking YouTube videos of landlords inspecting self managed properties which have been left in a disgraceful state I'm even more convinced that working through an agent ensures top quality, stress free rentals.

Cider Drinker

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

19:56 PM, 7th April 2024, About 9 months ago

Reply to the comment left by NewYorkie at 06/04/2024 - 19:29
In my home town and neighbouring villages, I’d never have imagined that there’d be any holiday lets.

Nowadays, people are complaining that there are no rental properties available privately because so many are becoming AirBNBs.

I wouldn’t need to rent a property for many weeks per year in order to make almost as much as I make by letting to a permanent tenant (even after all other expenses are considered) and I’d not be impacted by the RRB.

NewYorkie

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

20:12 PM, 7th April 2024, About 9 months ago

Reply to the comment left by Cider Drinker at 07/04/2024 - 19:56
I guess it depends if you really want/need the money. My daughter is airbnb'ing a room in her home, and it's a useful boost to her income. For me, the opportunity arose to buy the house I'd wanted for some years, 1850 townhouse. It needs everything done, but will be amazing when done.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More