Portfolio landlords are raising capital for expansion

Nearly four in 10 (37%) portfolio landlords, those with four or more properties, plan to increase the size of their portfolios in 2024, Paragon Bank research has found.

The majority of them will fund the purchases by releasing equity from other properties in their portfolio or using existing capital – 55% and 58% respectively.

The findings are included in Paragon’s new Portfolio Landlord Report 2024, issued recently.

  1. Portfolio Expansion: A significant portion (37%) of portfolio landlords plan to increase the size of their portfolios in 2024, either through releasing equity or using existing capital. This expansion is driven by various factors, including long-term demand for rental property and retirement planning.
  2. Property Preferences: Among landlords surveyed, terraced homes are the preferred choice for purchase (52%), followed by semi-detached homes (46%) and individual flats (26%).
  3. Purchase Methods: Six out of 10 landlords (61%) intend to buy with a mortgage, while four out of 10 (39%) plan to buy outright.
  4. Investment Targets: Portfolio landlords tend to target properties with higher yields, such as houses in multiple occupation (HMOs) or properties that can be converted to HMOs. Around 21% of portfolio landlords intend to purchase HMOs, and a similar percentage (20%) plan to invest in properties that can be converted to HMOs.
  5. Financial Strategy: Remortgaging existing properties to release equity is highlighted as a strategy for portfolio landlords to diversify their portfolios, increase rental income, and achieve long-term financial goals. This approach allows them to take advantage of opportunities in the market while maximizing returns.
  6. Management Considerations: While HMOs offer attractive income potential, they also require more management and compliance efforts. Portfolio landlords are advised to work with specialists who understand their needs and can provide tailored solutions to effectively manage HMO properties.

Overall, the research suggests that portfolio landlords are optimistic about the buy-to-let market and are actively seeking opportunities to expand their portfolios while strategically managing their investments for long-term financial success.




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