Portfolio landlords eye capital raising to fund 2024 expansion
Over half of landlords prefer to purchase terraced homes, 46% prefer semi-detached homes and a quarter are looking out for individual flats.
Nearly four in 10 (37%) portfolio landlords plan to increase the size of their portfolios in 2024 either through releasing equity or using existing capital, research from buy-to-let lender Paragon Bank reveals.
Its Portfolio Landlord Report 2024 found that seven out of 10 (69%) of those adding property are doing so as part of a portfolio expansion strategy, six out of 10 (60%) are driven by long-term demand for rental property and (half) 50% are doing so as part of their retirement plan.
TERRACED HOMES
The survey also showed that six out of 10 (61%) landlords will buy with a mortgage and four out of 10 (39%) will buy outright and that just over half (52%) of landlords prefer to purchase terraced homes like those pictured, 46% semi-detached homes and 26% individual flats.
Over a third (36%) of portfolio landlords said they would maintain portfolios at current levels while one in five (21%) were looking to reduce the size of their portfolio.
Richard Rowntree, Managing Director of Mortgages at Paragon Bank, says: “Portfolio landlords are optimistic about the future of the buy-to-let market and are looking to take advantage of the opportunities that arise in 2024.
“One of the ways they can do this is by remortgaging their existing properties, mortgaged or unencumbered and releasing equity to fund new purchases. This can help them diversify their portfolios, increase their rental income, and secure their long-term financial goals.”
PORTFOLIO LANDLORDS
The survey also revealed that portfolio landlords target properties that offer higher yields, such as houses in multiple occupation (HMOs) or properties that can be converted to HMOs.
Around a fifth (21%) of portfolio landlords intend to purchase HMOs and a similar amount (20%) properties that can be converted to HMOs.
Rowntree adds: “Portfolio landlords are experienced and savvy investors who know how to maximise their returns by targeting properties that offer higher yields.
“HMOs are one of the most attractive options for portfolio landlords, as they can generate more income per property and reduce the risk of void periods.
“However, HMOs also require more management and compliance, which is why portfolio landlords need a specialist who can understand their needs and provide tailored solutions.”
