A new survey has revealed that double the proportion of landlords with two or fewer properties are planning to sell up and leave the rental market, compared with those who have portfolios comprising more than 10 properties (24.47% compared with 12.16%).
The study, undertaken by The DPS, shows how almost three times the proportion of landlords with portfolios larger than 10 properties intend to buy more compared with those who own one or two (13.51% compared with 5.63%).
The poll also revealed that, of those intending to leave the market, more than twice the proportion of landlords who are not set up as a business for the purposes of renting intend to sell all of their properties and leave the PRS altogether compared to those operating a limited company (21.72% compared with 10.34%).
Separate research by the organisation also suggests that some larger landlords are buying up the properties of those with smaller portfolios.
Matt Trevett, MD at The DPS, said: “Whilst the volumes of tenancies we protect remains unchanged, the data suggest that landlords operating on a larger scale are showing a stronger commitment to the PRS compared with those with fewer properties.
“Landlords with a higher number of properties typically choose to place their businesses inside limited companies in order to better manage their costs, which are impacted by high interest rates and tax changes.
“We are also seeing different intentions emerge among landlords who use companies compared with those who don’t, suggesting that how a landlord chooses to organise their business has a significant impact on their attitude towards the market.”
The survey also revealed that six times the proportion of landlords who operate a limited company intend to buy more property compared to those who are not set up as a business for the purpose of renting (24.14% compared to 4.64%).
Only 8% of landlords operating as sole traders intend to buy more rental properties; 21.72% of them intend to sell all their properties and leave the rental market altogether, the DPS added.
The research also revealed that twice the proportion of landlords renting out property that used to be their own address intend to sell all their properties and leave the rental market altogether compared to landlords that bought their property to rent it out (35.80% versus 18.08%).
By contrast more than twice the proportion of landlords who bought property to rent it out intend to buy more property compared to those renting out property that used to be their own address (9.12% compared to 4.32%), the organisation added.
A separate DPS survey of letting agents’ clients reveals that 28% believe that larger landlords are more frequently purchasing properties from those with more modest portfolios.
The second study also revealed that 36% believe that more landlords are now setting up as a business.
Paul Fryers, MD at Zephyr Homeloans, a specialist BTL lender, also owned by the Computershare group, commented: “Landlords using a company for their business operations to control costs is fast becoming the norm and such landlords comprise the vast majority of our customers.
“Landlords who last summer were paying around 4.38% on a typical five-year variable buy-to-let mortgage are now typically paying around 6.22% – an extra three hundred pounds a month on a £200,000 loan.
“We would encourage brokers to work closely with their landlord customers to thoroughly investigate the most effective ownership options for their existing portfolio or additional property investments.”
