Investors are keen to expand their portfolios despite negative factors affecting the sector
Despite the higher cost of borrowing and tighter bank lending, most buy-to-let landlords will increase the size of their portfolios this year, a survey shows. But prospects of lower returns mean that fewer new investors will enter Britain's buy-to-let sector this year, analysts forecast.
According to a survey by estate agency Savills, two-thirds of landlords plan to increase the size of their portfolios this year. By comparison, only 10 per cent of existing investors will sell their assets if conditions worsen.
Phil Tennant, London regional sales director at Hamptons International, said professional investors saw the slowdown in the sales market as a buying opportunity when they could negotiate a better price. He said they were looking for repossessed properties and vendors desperate to sell.
However, Savills analysts said that recent pressure on returns and the growing difficulty of covering large mortgage payments with rental income meant that fewer new investors would enter the market than in previous years. The survey said existing investors looking to make new purchases would focus on secondary market properties instead of new homes.
Director of Savills research Jacqui Daly said: 'We expect this slowdown in the expansion of the sector to be accompanied by a change in the profile of properties acquired by buy-to-let investors. There will be a shift away from newbuild flats where returns are likely to be under the greatest pressure. While 55 per cent of owners own newbuild flats in their portfolio, only 24 per cent of respondents would look to expand their portfolio by acquiring this property type.'