Portfolio landlords are more likely to be looking further from home

The research – undertaken by BVA BDRC  carried out in March 2019 with the results based on 829 online interviews – shows that 77% of all landlords said either all, or more than half, of their rental properties were within a 50-mile radius of where they live, with a further 4% saying about half of their properties were within this locale.

The research also shows that portfolio landlords (those with four or more mortgaged buy-to-let properties) are much more likely to look further afield when it comes to their mortgage portfolios. The number having all their properties within a 50-mile radius drops to 63% of portfolio landlords, while only 55% of those with over 20-plus properties were in a similar position.  

Jeff Knight, our Marketing Director, said: “We’ve heard a lot lately about landlords looking beyond their own regions when it comes to adding to portfolios and seeking investments that perhaps can deliver them a greater yield in a different part of the country. What our research appears to show though is that, for the vast majority of landlords, this doesn’t ring true and most are sticking to the areas they know best, with many having all their properties within an area close to where they live.

“This makes perfect sense given the advice that has been offered to landlords over the years which is to invest in the areas they know. That said, the bigger portfolio landlords are much more likely to own properties further afield, possibly because they can spread the risk and they may have much more time to carry out all the necessary research and due diligence before they make an investment decision.

“Advisers are in a strong position to provide the advice and support all landlords need, not just on the finance, but also in terms of whether the client fully understands their potential investment purchase and the pitfalls that could be involved in buying away from a local area.”

The results of the research do also highlight the means by which landlords are increasingly likely to add to portfolios, particularly those classed as portfolio landlords, regardless of where in the country they are purchasing.

Over half said they intend to purchase their next buy-to-let property through a limited company, rising to seven in 10 for landlords with over 11 properties in a portfolio. Of those landlords, 71% intend to use a buy-to-let mortgage to finance their purchases, which Foundation believes also presents a significant opportunity for mortgage advisers.

Knight added: “There’s no doubting that the major growth area of buy-to-let is the use of limited company vehicles, particularly for purchases but also increasingly for remortgaging. More and more landlords are adding to their portfolios through a limited company in order to ensure they can secure the full tax relief on their mortgage payments which has been cut for properties held in an individual’s name.

“These research results certainty chime with our own business results for April with 62% of all our mortgage applications coming from portfolio landlords and 53% for limited company business. Our focus is on ensuring that we support advisers with these clients with an easy-to-understand limited company/portfolio landlord proposition that takes away much of the administration demands and presents products with flexible criteria and highly-competitive rates which are not higher just because the client is utilising limited company.

“We believe the market will continue to head in this direction and our specialist focus in this area will continue to help advisers who are likely to see a growth in client numbers over the months and years ahead.”

Our range of buy-to-let products for those who are purchasing or refinancing through a limited company is currently available up to 80% LTV, is offered at an ICR of 125 times the pay rate for five-year fixed rates, has no maximum age, accepts newly-incorporated limited companies, and has a maximum loan size of £1.5m.

This article was first published by Mortgage Introducer

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