Average rental yields are at a 10-year-high of some 6.3% according to a prominent buy to let lender.
The Q2 2024 Landlord Trends report, conducted by Pegasus Insight and issued by Foundation Home Loans, is based on 799 online interviews with landlords in June and July.
The survey reveals that 60% of landlords borrow to fund their portfolios, holding an average of 5.3 loans, which increases to 14.4 loans for those with portfolios in excess of 11 units. Over a third plan to remortgage or undertake a product transfer in the next 12 months.
Landlord borrowers owe, on average, £665,000 in total, equating to around £125,000 per buy-to-let mortgage.
Total borrowing ranges between £268,000 for non-portfolio landlords owning one, two or three units; and £1.16m for portfolio landlords.
Foundation Home Loans director of sales Grant Hendry says: “Despite a challenging market environment, landlords are finding ways to maintain profitability and expand their portfolios.
“Average rental yields increasing, the ongoing preference for limited company ownership and high tenant demand are all encouraging trends which keep on emerging and should provide mortgage advisers with opportunity to secure business and help landlords navigate the market.
“In an interest rate environment which has seen some falls already, we believe the opportunity to remortgage is now greater than in the last couple of years, and we’ll see a growing cohort of landlord borrowers able to remortgage to a different lender rather than simply have to accept a product transfer.”
Of the 10% of landlords who said they intend to increase the size of their portfolio over the next 12 months – with multiple options available to them – 67% said they plan to use a BTL mortgage, 29% to buy outright, 31% to release equity from existing properties, 10% will take out a commercial loan and 5% will use funds drawn from a pension pot.
Rent controls and legislative changes, such as the scrapping of Section 21, are primary concerns. Some 55% say rent controls will “greatly impact” their commitment to renting, and one in three would consider selling their properties if controls were introduced.
