Increasing number of large-scale landlords as buy to let amateurs quit

A new survey by one of the sector’s most respected lenders, Paragon, suggests large scale landlords are now a bigger force in the buy to let sector following the exit of some small amateur landlords.

Paragon’s survey is small - just 200 landlords - but it shows that larger operators in the rental sector now have an average of 13.1 properties in their portfolio, up from 12.8 three months ago.

Underlying these headline figures, landlords with between 11 and 20 properties have grown as a proportion of the survey population from 14 to 18 per cent. 

As a result, average portfolio values are getting higher – rising from £1.68m in Q1 2019 to £1.76m this time round.

According to Paragon’s latest survey, larger scale landlords are nearly three times as likely (11 per cent) to be considering a property purchase in the next quarter than their smaller scale counterparts (just four per cent).

Interestingly, there has been a sharp increase in those considering buying HMO property up from just one in 20 to one in five.

Not only is this indicative of higher experience levels amongst prospective buyers, it also suggests that landlords are looking to add higher yielding properties into their portfolios perhaps to offset some of the pressure from rising tax costs.

Despite the higher activity levels among larger scale landlords, overall landlord sentiment remains subdued with only 13 per cent of landlords feeling optimistic about the future.

“Professional landlords with larger portfolios make up the backbone of the UK’s private rented sector and it’s encouraging to see them continue to build their property portfolios” explains John Heron, director of mortgages at Paragon.

“However, with a heightened interest in higher yielding property types and an increasingly prudent approach to financial management, it’s clear that landlords are proceeding cautiously as they seek to head off the twin challenge of higher tax and growing economic uncertainty.”