A survey by The Deposit Protection Service (DPS) of over 1,000 landlords has uncovered significant changes in the private rental sector (PRS).
The survey shows that landlords with two or fewer properties are more likely to leave the rental market compared to those with larger portfolios.
Specifically, 24.47% of smaller landlords plan to sell up, against 12.16% of those with more than ten properties. Additionally, landlords with more than ten properties are almost three times more likely to acquire more properties than those with one or two properties.
The survey also found that landlords not operating as a business are more likely to sell all their properties and exit the PRS (21.72%) compared to those running a limited company (10.34%).
This trend is part of a broader shift where larger landlords are purchasing properties from those with smaller portfolios.
Matt Trevett, managing director 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.”
Paul Fryers, managing director at Zephyr Homeloans, a part of the Computershare group, added: “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.”
