Derby Landlords Planning to Grow Buy-to-Let Portfolio’s

According to The Association of Residential Letting Agents there are a record number of landlords quitting the lettings market.

“The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty has meant the BTL market is becoming increasingly unattractive to investors” claims David Cox, ARLA Propertymark chief executive.

However, according to Aldermore, the specialist Buy to Let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (i.e. Portfolio landlords are landlords that own more than one property).

So, I thought, “Are Derby landlords feeling the same?” If so, if these numbers were applied to the Derby private rental market, what sort effect would it have on the Derby property market as whole?

Talking to the landlords I deal with, most are feeling quite optimistic about the future of the Derby rental market and the prospect it presents notwithstanding the doom and gloom prophecies that the property market will shrink. Many of those Derby landlords who are looking to enlarge their portfolio are doing so because they still see the Derby rental market as a decent investment opportunity.

With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of Crypto currency and the yo-yoing of the Stock Market, the simple fact is, with rental yields in Derby far outstripping current savings rates, the short term prospect of a minor drop in property prices isn’t putting off Derby landlords.

Aim to ‘Go Long’

The art to buying a Derby buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price.

No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) … the housing market has always bounced back stronger in the long term. That’s the point … long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort the private rental market for their accommodation needs.

So, what of the numbers involved in Derby?

There are 3,144 landlords that own just one buy to let (BTL) property in Derby and 6,844 Derby landlords, who are portfolio landlords (i.e. they own one or more buy to let properties). Between those 6,844 Derby portfolio BTL landlords, they own a total of 14,364 Derby BTL properties and they can be split down into the size of landlord portfolio in the graph below….

As a general indicator, if I apply the Aldermore figures, that means 2,806 Derby landlords have plans to expand their BTL portfolio in the coming year or so.

However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market as many landlords mentioned too many limitations and higher taxation, while some believed that tenants are excessively protected to the disadvantage of the landlord.

The 2nd Rule of Buy to Let

I would say there is no repudiating that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of Derby buy to let landlords. Despite these latest changes, many landlords still view buy to let as a good investment, as long as you buy right and expand your portfolio taking into account the second rule of buy to let … assess your position on the buy to let seesaw of capital growth and yield.

If you want to buy right and assess your own portfolio on the yield/capital growth seesaw … drop me a note. I don’t bite and the opinion I give, whether you are landlord of mine or not as the case may be, is given freely, without obligation or cost. The choice is yours.

Thank you for reading this article.