Concern among UK landlords about the impact of rising inflation on their portfolio investments is prompting measures to mitigate rising costs, but it won’t drive a wholesale change in investment behaviour, according to a survey of several hundred UK landlords by GetGround, the buy-to-let company creation and management platform.
With some experts forecasting inflation to rise above 8% and stay there for most of 2022, more than four in five landlords (83%) surveyed during February 2022 are ‘concerned or very concerned’ that rising inflation will negatively impact their ability to continue to invest profitably in UK rental property.
The cost of investing in property is increasing as a result of inflation. Nine in 10 landlords (90%) say they expect rising inflation to have an impact on the cost of maintaining their property investments.
More than half (52%) of respondents expect the cost of managing their property investments to increase by 25% to 50%. 1 in 10 (10%) of them expect costs to increase by more than 50%.
Mortgage finance (52%), energy bills (52%) and insurance premiums (44%) are cited as the three aspects of property investment most likely to be impacted by inflation. Property management services are a close fourth (40%).
Despite these challenges, less than 3 in 10 landlords (29%) intend to reduce their property investment activity while inflation is high. Among the 71% who won’t downsize, 33% will continue as they are and make no changes, and a further quarter (24%) plan to increase their property investment activity.
When asked how they feel about property investment in the context of other so-called ‘inflation-beating’ assets, landlords remain confident.
Gold and commodities are the most popular alternative ‘inflation-beating’ assets among landlords with 26% and 22% of landlords investing in them respectively, but two in five (38%) UK landlords believe their property investments outperform all other assets in this category.
Moubin Failzullah Khan, CEO of GetGround, said: “Despite the unprecedentedly high levels of inflation we’re expecting to see, our survey data strikingly affirms the enduring appeal of property investment.
“Long-term investment confidence is well founded. Property only becomes a less attractive option if investors can find a better inflation-beating return from other assets. While rental demand remains high and house building figures stay low, landlords investing in the right areas will not only have a steady stream of tenants to rent to, but will benefit from positive value growth.”
The survey also revealed that 69% of landlords feel a responsibility to help their tenants mitigate the impact of the cost of living crisis on their lives.
The most important actions landlords believe they can take to help tenants protect themselves against rising costs are temporarily freezing rents (37% of landlords support this), making energy efficiency upgrades (35%) and agreeing longer tenancy durations (34%).
Faizullah Khan added: “While, like the rest of us, property investors aren’t immune to the impact of rising inflation, our research shows most UK landlords don’t want to pass that burden onto tenants, if they can help it.
“Instead they want to be accommodating to their tenants in ways that are meaningful and long-term, proving that blending longer-term thinking with empathy actually makes better business sense.”
