Rise in landlords looking to release equity from portfolios

The number of landlords intending to release equity from their existing portfolios has seen a significant increase, new research from BVA BDRC has found.

According to the findings, the value of an average portfolio landlord’s properties – those with more than four buy-to-let (BTL) mortgages – now exceeds £2m, with an average LTV of 56.2%.

The landlord research, based on answers from 753 ‘consumer’ and ‘portfolio’ landlords, showed that of the 30% who say they intend to remortgage in the next 12 months, a third of those are doing so in order to release equity from their portfolios.

Foundation Home Loans said the likelihood is this released equity would be put towards further purchases.

“We’ve seen the BTL market moving steadily towards a greater level of professionalism for some years now, and this has meant a growing number of landlords are now defined as ‘portfolio’ operators and have long-term plans which involve making the most out of their properties,” commented Foundation Home Loans commercial director, George Gee.
 
“The research shows a number of key portfolio landlord intentions, particularly around extracting equity from their properties. Over the past year, in many areas of the country, we’ve seen double-digit house price growth, and even without access to the stamp duty holiday, the intention to remortgage to take out that increased value to purchase more has grown.
 
“It means advisers are likely to see a growing spike in BTL remortgage advice demand, and the positive news is there are very competitive product options for all types of portfolio landlords at present.”

The research also showed that portfolio BTL landlords are more likely to want to remortgage in the next 12 months, with 43% compared to their ‘consumer’ landlord counterparts at 20%.
 
The potential to add to portfolios, and the growing strength of the letting market, is shown in terms of larger landlords being typically more upbeat about the prospects for their own letting businesses.
 
Portfolio landlords are also significantly more upbeat, at 46% compared to 35% of consumer landlords. This climbed to 50% of landlords who own over 20 properties, saying they felt either “good” or “very good” compared to just 35% of single property landlords.
 
Gee added: “Portfolio landlords are likely to grow in number in the months and years ahead, and as specialist lenders in this space, we will continue to develop the product options and flexible criteria to help them get the most out of their existing properties to expand their letting footprint.”

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