A new survey appears to lift the lid on why landlords remain in buy to let, despite the tax and regulatory controls now making the sector so challenging.

Paragon Bank surveyed 500 landlords with up to three properties and with declared ambitions to build larger portfolios. 

Key findings as to why they stay involved include: 

– Long-term rental demand: Six in ten landlords (60%) cited the ongoing demand for rental properties as a key factor in their decision to grow their portfolios;

– Retirement income: Over half of landlords (54%) are looking to add properties to their portfolios as a means of supplementing their retirement income;

– Capital appreciation: Nearly half of respondents (47%) believe that long-term house price growth is a significant driver for their investment decisions; and

– Preference for property: Over a third of landlords (34%) prefer property as an investment asset over other options.

Louisa Sedgwick, Paragon Bank’s Managing Director of Mortgages, says: “The rental market is set for continued growth, driven by projected population increases of around 10% over the next decade. This favourable market outlook is underpinning the investment decisions of aspiring landlords.”

“The research also demonstrates a clear focus on long-term planning, with over half of landlords building portfolios to support their retirement. This indicates a strong commitment to the rental sector and is essential for the overall health of the private rented market.” 

The Paragon study also sheds light on the factors that influence landlords’ decisions to enter the rental market in the first place. 

Friends and family played a significant role for many, with 43% citing them as a primary motivation. Additionally, a large proportion of landlords (39%) started renting out their first property by accident, often after purchasing a second home or inheriting property.

When asked why they chose property over other investments, landlords emphasised its tangible nature (67%), wealth-building potential (54%), and the ability to pass it on as an inheritance (53%).

Sedgwick concludes: “The rental market is attracting a growing number of landlords who are inspired by their friends and family or who have discovered the benefits of property ownership through other circumstances. These aspiring landlords are committed to providing rental homes for the future and require a supportive regulatory and fiscal environment to continue their investment activities.”