Around two thirds (64%) of UK landlords are optimistic about the outlook for the residential buy-to-let (BTL) sector over the next three years despite Brexit worries. Of this, more than one in 10 (13%) are “very” optimistic in terms of investment growth and yields.
According to research commissioned by Cambridge & Counties Bank1, the specialist property lender, a significant number of landlords are using the current market volatility to grow their portfolios: nearly a fifth (19%) are looking to grow their portfolios by a third and 11% want to double it over the next three years. The research found that just 19% of landlords are looking to sell.
Despite the strong level of optimism, Brexit remains a key uncertainty for property sector professionals with two fifths (40%) of landlords conceding that it is top of their list of concerns. Brexit is seen as a bigger risk than rising interest rates (cited by 32%), a lack of confidence in the stability of lenders (32%), and rising levels of tax (also 32%).
While the BTL sector is viewed most positively, a similar number (61%) of landlords are equally optimistic about student accommodation in terms of growth (with 16% being “very” optimistic). Office buildings and properties are viewed positively by two fifths (41%) of respondents - though almost a third are not optimistic.
In addition to growing their property portfolios, a significant number of landlords say they will be refurbishing their BTL and investment properties, with an average of £10,000 set to be spent. One in 10 (11%) of respondents to the Cambridge & Counties Bank study said they would spend more than £20,000, with 4% forecasting they would invest more than £50,000 in their estate.
As part of its property finance offering, Cambridge & Counties Bank2 provides refurbishment loans for experienced property investors, landlords and developers looking to upgrade or convert an existing property into a residential, commercial or mixed-use property for the purpose of either rental or sale.
Simon Lindley, Chief Commercial Director, Cambridge & Counties Bank, said:
“In spite of Brexit worries, it is great to see that the overall outlook for the commercial property sector is one of optimism. At Cambridge & Counties Bank, we remain very much focused on supporting our clients with our comprehensive product suite and in doing so maintain our market leading level of customer satisfaction.”
One of the shocking results of the research was the growing concern among landlords with regards to the financial stability and strength of their banking partners. Just one in five (20%) said they were very confident of their lender’s stability, with 18% of landlords saying they are “not confident” in their lenders stability given recent announcements of funders going into administration or closing their books to new business.
(1) 539 landlords were surveyed. The research was carried out by the market research company Consumer Intelligence on 20th to 21st of March 2019.
(2) Cambridge & Counties Banks refurbishment loans – minimum loan size begins at £150k.
Simon Lindley adds:
“Cambridge & Counties Bank has seen a steady stream of borrowers switching from other lenders, often recommended by the intermediaries and brokers we work closely with on a daily basis. We are actively focused on becoming the bank of choice for professional property investors and landlords, and will capitalise on the record set of results we posted for FY2018 and the momentum we have across the UK to grow our market share further.”