Landlords expect portfolio value increases

Landlords expect the net value of their property portfolios to increase over the next 12 months, the first positive prediction for more than two years, according to Paragon Mortgages.

Its latest quarterly survey shows that landlords expect, on average, a 0.8% increase in the value of their portfolios over the coming year. This is the first positive increase since the first quarter of 2007 and offers evidence that landlords believe house price falls have bottomed out.

Paragon Mortgages’ research also shows that landlords have been taking advantage of house price weakness since the first quarter of 2007 to add to their portfolios. Landlords owned an average of 11 properties at the beginning of 2007, which had increased to 12 properties by the third quarter of this year.

 Paragon’s research also reveals that the overwhelming majority of landlords plan to retain their investment properties during the fourth quarter of the year. In total, 93% of landlords said that they had no plans to sell property during the period, with 14% stating that they intend to buy further investment property during the quarter.

John Heron, Paragon Mortgages’ managing director, said: “House prices have fallen steadily since the end of 2007 and this is reflected in landlords’ expectations for the future value of their portfolios. It is an encouraging sign that they expect the value of their portfolios to increase over the coming months.

“Interestingly, landlords have not generally seen falling house prices as the catalyst to sell property and have used weaker prices to add to their portfolios. Property investment is not a short-term game and professional landlords have a long-term view – they are prepared to ride-out fluctuations in house prices as the long-term performance of property versus other asset classes is excellent.

“Despite strong rental demand and the availability of property at good value prices, landlords may well be frustrated in their attempts to buy because of a shortage of buy-to-let finance. There are only two lenders making any levels of buy-to-let finance available at present because of the continuing dysfunction in the money market. It is vital to the longer term health of the private rented sector that the Government considers this specialist market as well as the more politically attractive owner-occupied sector.”