Nearly four in 10 (37%) portfolio landlords have said that they intend to increase the size of their portfolios this year, with the majority funding the purchases by releasing equity from other properties in their portfolio or using existing capital – 55% and 58% respectively.
The findings come from Paragon’s new Portfolio Landlord Report 2024 which polled nearly 400 4+ property landlords across the UK.
According to the data, 69% of those adding property are doing so as part of a portfolio expansion strategy, 60% are driven by long-term demand for rental property, and 50% are doing so as part of their retirement plan.
The survey also showed that 61% of landlords will buy with a mortgage, 39% will buy outright, and 52% of landlords prefer to purchase terraced homes, 46% semi-detached homes and 26% individual flats.
Overall, 36% of portfolio landlords said they would maintain portfolios at current levels, with a fifth (21%) looking to reduce the size of their portfolio.
Richard Rowntree, Managing Director of Mortgages at Paragon Bank, said: "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."
He added: "We are committed to supporting portfolio landlords with a range of specialist products and services, including flexible and competitive remortgage options."
The survey also revealed that portfolio landlords target properties that offer higher yields, such as houses in multiple occupation or properties that can be converted to HMOs.
According to the survey, 21% of portfolio landlords intend to purchase HMOs and 20% of properties can be converted to HMOs. HMOs are properties that are rented out to at least three households that share facilities such as a kitchen or bathroom.
Rowntree concludes: "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 lender who can understand their needs and provide tailored solutions."
