Buy-to-let outlook stable

The average portfolio size in June 2003 has risen slightly to 10.6 properties, up from 10.5 in March, and from 9.0 properties at the end of last year, according to Paragon. On average, landlords are planning to increase the number of properties in their portfolios by 8.6% over the next 12 months, to an average of 11.5 properties – meaning that the typical landlord expects to acquire one more property over the next year.

Landlords are positive about the prospects of their own business going forward. This is particularly the case for landlords having a larger number of properties, 36% of whom describe their business as ‘growing’ or ‘booming’ (compared with 28% generally). Over 67% of landlords believe their buy-to-let business is stable and only 5% believe their business to be declining.

Average landlord property portfolio values continue to rise, up by 6.1% from £686,000 three months ago to £728,100 now. On average landlords expect their existing portfolio to grow by 5.8% over the next 12 months, to more than £770,000. The higher level of optimism among landlords with larger portfolios is reflected in almost half of them having significant expansion plans over the next year, against only 17% of those owning only one or two properties.

John Heron, managing director of Paragon Mortgages commented: “The buy-to-let market is growing unabated and landlords are looking into the future with optimism. While property values are continuing to rise, yields are now stabilising and are expected to remain solid over the next 12 months. Landlords are confidently planning to expand their portfolios, and the state of the residential buy-to-let market is perceived to be very healthy.”