Portfolio landlords – those with four or more properties - are the backbone of the private rented sector. Our latest report, Portfolio Landlord 2024, looked into who these landlords are, how they feel about their property business and their plans for expansion.

Key findings: A bullish outlook for 2024

Earlier this year, we observed a surge in tenant demand for rental properties, with six in ten landlords reporting increased demand in the final quarter of 2023.

Building upon this trend, our recent survey of nearly 400 portfolio landlords also reveals a positive outlook this year with a significant number planning to expand their portfolios:

- 37% of portfolio landlords aim to grow their portfolios in 2024, driven by sustained rental demand and retirement planning.
- Over half of landlords are planning to release equity from their property to fund new purchases, highlighting their proactive approach to portfolio growth.
- 92% of landlords express confidence in strong tenant demand, while 54% are optimistic about the prospects for their own lettings business. Negative sentiment remains low at 16%.
- 58% of landlords invest for long-term capital gains, 54% for pension provision and 48% to develop a steady income stream.

How do landlords view their role?

When we look at how landlords view their role, 67% prefer the term ‘landlord’ over other titles, such as lettings business, SME or housing provider. It shows a strong correlation between landlordism and other property-focused careers, with 45% reporting some form of additional property-related income or business affiliation.

Commitment to sustainable properties

Despite the cancellation of planned changes to minimum EPC energy ratings for rental properties, landlords carry on in improving the energy ratings of their properties. Nearly four in 10 are enhancing properties in their portfolio to meet a minimum standard of EPC C, whilst a third have already achieved that level.

Property preferences

Terraced homes remain the top choice among portfolio landlords in the private rented sector, followed closely by semi-detached properties.

Given their extensive experience, some portfolio landlords would also diversify their investment. That makes Houses in Multiple Occupation (HMOs) and Multi-unit Blocks popular options as well, with 21% preferring to acquire ready-made HMOs or properties suitable for converting into HMOs (20%).

Moreover, many portfolio landlords display a distinct preference for properties with potential for improvement. Over half actively seek out properties in need of either major (33%) or minor (22%) refurbishment, whilst only 13% prefer properties that are immediately ready for occupancy, reflecting a preference among portfolio landlords for value-add opportunities.

Rent management strategies

When it comes to managing rents, landlords predominantly opt for annual increases (41%). Other catalysts for rent increases include when the landlord experiences a cost increase, such as mortgage payments, or new tenancies.

Key factors influencing the determination of new rent levels include local market rates and the landlord's borrowing costs. Other lesser factors include the general rate of inflation, maintenance costs, property improvements and letting agent or management fees.

Challenges and growth opportunities in 2024

In reflecting the challenges and opportunities with operating rental portfolios, Richard Rowntree, Managing Director of Mortgages at Paragon Bank, notes:

“Although being a portfolio landlord can be rewarding, both financially and because of the important societal aspect of providing homes, it is not an easy job. Managing properties and tenancies is labour intensive and we hear about some of the challenges landlords have faced over the past 12 months and how they manage these.”

Among the most prevalent challenges landlords encounter are late payments (37%), arrears (30%), voids (26%), and property damage (17%).

However, with a significantly higher number planning to expand their portfolios compared to those considering reducing their stock or exiting the sector altogether, it's evident that portfolio landlords remain optimistic, positioning them for substantial growth in 2024.

As a specialised lender in buy-to-let mortgages, Paragon Bank provides product switch mortgages for both portfolio and non-portfolio landlords. We offer a diverse range of mortgage products with flexibility and stability in mind for customers with unique circumstances and requirements.

Are your portfolio landlord clients looking to explore mortgaging and refinancing options for their expansion plan?

Reach out to your regional manager for more information and personalised support.

Other useful resources:

Intermediary firms expanding amidst labour market challenges

Intermediaries anticipate 2024 increase in limited company buy-to-let lending

PRS supports over 390,000 jobs across UK economy, new report states

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