Landlords shift priorities to build up war chests

Property Reporter
29th June 2020
new cash

UK landlords are adapting to the current financial landscape by shifting focus away from risk management to growing their cash reserves and expanding their portfolios.

According to the latest research from Mortgage for Business, landlords who are remortgaging are currently doing so primarily to build a war chest, with 30% of property investors according to Mortgage for Business.

The specialist BTL broker also found that 46% of landlords are increasing the size of their loans – significantly higher than the long-term average of 38%.

Steve Olejnik, managing director of Mortgages for Business said: “Our research suggests the number one priority of active, professional landlords is to set themselves up with a war chest so they can look for growth. Smart landlords know that the time is coming to bag some bargains and start expanding portfolios. Increasingly, that is where their remortgaging priorities lie.”

This time last year, the main concern of remortgaging landlords was not to build up a war chest but to manage risk by, for instance, moving onto a longer fixed-rate mortgage and away from variable rate products. Mortgages for Business’ research suggests the management of risk is now the third most important concern.

Steve said: “Twelve months ago, in 2019, a lot of the landlords we worked with were looking to guard against risk. That’s shifting now as opportunities to purchase cheap properties presents themselves. With properties prices poised to drop before the end of the year, the balance between risk and reward is shifting. It will be interesting to see how landlords’ investment strategies adjust to changing tenant demand.”

However, landlords remain somewhat risk-averse; they are increasingly looking to manage their cashflows. Lowering monthly payments is now the second most important concern when remortgaging – it was the third in 2019.

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