The research carried out following the recent economic upheaval, finds that landlords are making significant adjustments to their portfolios to cater for the fast-changing macroeconomic environment with around a third saying that they are looking for ways to make their properties more energy-efficient to combat rising fuel costs.
The study, which follows up on the bank’s recent Property Survey Report, illustrates the impact that rising energy bills and the cost of living squeeze are having among smaller professional landlords. Those with four-five properties are twice as likely to be making their properties energy efficient for instance, compared to those with more than 10 properties.
The study also shows that 34% are cutting back on buying properties in cities as the market adjusts to changing employment practices, as more people are working from home. 93% of respondents say the current market outlook has impacted their portfolio/ investment strategy in some way, with 53% concerned they will experience more void months. The bank’s previous research on the impact of the Covid pandemic on void months, found that more than 40% of landlords had experienced more void months than usual, so the prospect of further vacancies will be of concern.
21% report that one or more mortgage deals have fallen through, with 40% adding their lender has increased the loan rate on one or more properties in their portfolio.
As a result, 45% say they are planning to purchase lower-value properties to remain under the Stamp Duty Land Tax threshold to combat rising costs. There could also be knock-on effects on tenants as a quarter of landlords say the current economic environment will affect the maintenance and refurb programmes of their portfolios.
James Sproule, UK Chief Economist at Handelsbanken, said: “The property market is entering a period of increasing uncertainty, with house prices in some areas already falling and a rising regulatory burden being seen by some landlords as a reason to reduce their exposure to the market. While the ongoing cost of living crisis might be seen as the driving factor in the buy-to-let market, equally important are the post-pandemic movement back into cities, potential buyers delaying purchases and thus looking to rent, and fewer properties, meaning those who do persevere, are likely to see higher yields.
"Savvy landlords are using the changes to SDLT to cost-effectively reshape their portfolios and invest in energy efficiency, something which has become an ever greater concern of potential tenants.”
