UK landlords defy growing pressures by growing their portfolios
The latest analysis from Inventory Base, the UK’s market leading property inventory software, reveals that UK landlords are choosing to grow and diversify their portfolios by purchasing a larger number of lower value properties instead of relying on a smaller number of high value properties in order to combat the various economic and government policy pressures that threaten to eat away at the profit of their enterprise.
Inventory Base has analysed landlord trends data* to see how the UK’s landlords are choosing to handle their portfolios in the wake of increased government intervention and economic pressures, including a look at average portfolio size, average portfolio value, and the average value of individual properties there within.
The key insight gained from this analysis is that to mitigate the impact of growing pressures such as inflated mortgage costs and capital gains tax, landlords are not choosing to slim down their portfolios but are instead opting to expand the number of assets they own by purchasing lower value properties. In doing so, they’re managing to increase their income.
In Q2 2024 – the latest available data – the average landlord’s portfolio size stood at 7.6 properties, marking a +5.6% increase on Q1 2024’s average size of 7.2 properties.
But the average value of individual properties within these portfolios has fallen over the same period of time.
In Q1, the average property value was £250,000, but by Q2 this had fallen by -10.5% to stand at £223,684.
So while portfolios have been increasing in size, their overall value has gone down. In Q1, the average landlord’s portfolio was valued at £1.8m, but by Q2 this had fallen by -5.6% to stand at £1.7m.
Despite this decline in overall value, increased portfolio sizes are matching with rising rent values to mean landlords are still managing to increase their rental income.
According to Rightmove’s Rental Price Tracker, the average rent cost in Q2 2024 (excluding Greater London) stood at £1,314 per month, marking a quarterly increase of +1.8% and an annual increase of +6.8%.
As a result of this increase, landlords’ decision to grow and diversify their portfolios has resulted in them achieving greater yields.
In Q1 2024, the average rental yield stood at 6.1%, while in Q2 it was +0.2% higher at an average of 6.3%.
Siân Hemming-Metcalfe operations director at Inventory Base, comments: “Whether it’s increases to capital gains tax, higher stamp duty, soaring interest rates, or even the proposed Renters’ Rights Bill, UK landlords have been through a lot. The challenges just keep piling up. But despite these pressures, landlords are finding ways to adapt to their ‘new normal’.
It was widely predicted that these pressures would force landlords to sell up and exit the rental sector, but the reality tells a different story. Instead of stepping away, landlords are showing resilience and adaptability. By finding ways to navigate the challenges, they’re ensuring their properties continue to play a vital role in the housing market.
Landlords, or the management agents they trust, should look to the growing range of tech solutions available. From CRM’s to inventory reporting solutions, these innovations and integrations can simplify operations, improve efficiency, and even reduce cost.”
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