Newly released data from banking company, Aldermore*, has found that over half of UK landlords
agree that they still feel optimistic about the future, with 66% stating that being a landlord remains a good way to make money.*
Despite 49% of respondents acknowledging that market conditions have become more challenging in the last twelve months, 54% said they still feel optimistic about the future of the rental market.*
The UK needs more landlords
Aldermore* reported that 42% of the landlords surveyed are considering downsizing due to inflation and upcoming legislative changes. However, in a bid to maximise returns on investment, 42% also say that if they were to look at expanding their portfolio, they’d purchase through a limited company.
As the outlook for new investors entering the market appears uncertain, almost two-thirds (62%) of landlords say that if market conditions continue on the same path, they will have no choice but to increase rents by at least 10% in the next 12 months.*
Tenants are having to compete for rental homes as they fly off the market as soon as they are listed. While house-saving becomes a lengthier process amid a cost-of-living crisis, the rental market is now grappling with ramped-up demand from those looking to rent for the time being instead.
The simple fact remains that the UK housing market, like every other market, is driven by the laws of supply and demand and it is no secret that there is a shortage of housing to rent in the UK.
Landlords
are conflicted with upping costs in this difficult economic climate, with 64% of landlords worried their tenants may not be able to afford their rent in the near future due to the rising cost of living pushing up demand for rental homes. The only way to diffuse this pressure is for the rental stock to increase, allowing the balance of supply and demand to somewhat even out.
Energy efficiency on the radar
Energy efficiency appears to be at the forefront of UK landlords’ minds. In a bid to create more sustainable portfolios that meet the government’s EPC regulations, 58% of landlords say that their property portfolio’s sustainability and energy efficiency is a top priority.*
In an attempt to stay on top of changing legislation, more than half (53%) are planning on carrying out property improvements in the next 12 months to upgrade the energy efficiency of their portfolio. *
Jon Cooper, head of mortgages at Aldermore, said: “2022 was marked by troubling developments to the economy and the property market has faced some significant challenges. With the cost-of-living crisis already impacting tenants, homeowners and landlords alike, the outlook for 2023 seems tricky to predict.
“However, as our Buy to Let City Tracker has revealed, there remain healthy and positive opportunities for landlords in the UK. As we head into 2023, landlords should work closely with their brokers to assess their portfolios and identify opportunities that lie ahead.”
Aldermore*
Thinking about becoming a landlord? Contact us today.
