Almost half of portfolio landlords plan buy-to-let refinancing over the next 12 months, according to the latest Landlord Trends report from Pegasus Insight. The research found 46% of landlords with four or more buy-to-let mortgages intend to refinance at least one of them.
Those borrowers expect to refinance an average of 3.7 mortgages each. Across all landlords with buy-to-let borrowing, 38% plan to remortgage or switch product over the same period, with those doing so expecting to cover an average of 2.9 mortgages.
Buy-to-let refinancing on that scale gives brokers a reason to review clients’ wider borrowing needs and portfolio plans. Early conversations, rather than waiting for a mortgage to reach the end of its term, can establish what landlords want to achieve next, whether that means restructuring their portfolios, investing in different regions or adding value to existing assets.
The report also recorded appetite for investment. While 44% of landlords plan to scale back their lettings activity, 5% intend to expand their portfolios. Expansion plans are most common among landlords with 11 or more properties, limited company landlords and those holding four or more buy-to-let mortgages, suggesting confidence is strongest among more established investors.
Some 85% of landlords still make a profit from lettings, and profitability has stayed broadly stable over six years. Average rental yields are unchanged at 6.4%.
“The private rented sector continues to play a crucial role in the UK housing market, and these findings show that there is still a substantial number of landlords actively managing and investing in their portfolios,” said Grant Hendry, director of sales at specialist lender Foundation (pictured).
“As operating conditions have changed, landlords have continued to show their resilience and ability to adapt, with the vast majority building diverse and profitable businesses.
“For proactive advisers, the level of refinancing anticipated over the coming year represents a valuable opportunity to have those conversations early and to add value by understanding what clients are looking to achieve. Rather than an exit, this is increasingly focused on adjusting their strategy, restructuring their portfolio and expanding their reach.
“The right funding remains absolutely crucial, particularly for larger portfolio landlords and those operating through limited companies, whose borrowing requirements can be more complex and may not always fit standard high street criteria. This is where a specialist lender like Foundation has an important role to play, providing the expertise, flexibility and range of options needed to support a broader range of property investors as their needs evolve.
“We work closely with advisers to support landlords of all shapes, sizes and requirements, including complex limited company structures and larger portfolios. As refinancing is expecting to play a significant role in the buy-to-let market, proactive advisers need a flexible and responsive lender to meet the changing needs of their clients.”
