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Portfolios shrink as landlords sell up ‒ Benham and Reeves
The average size of landlord portfolios has declined over the last year, as investors look to sell properties as they struggle to make a profit.
New research from estate and lettings agent Benham and Reeves compared the size of investors’ portfolios between the first quarter of last year and the same period of this year.
It found that average portfolios had reduced over that time from 9.1 properties to 8.6, equivalent to a 5.6 per cent drop.
However, some regions have seen far more significant changes. In Wales for example the firm said investors appear to be “leaving in droves”, with portfolio sizes dropping from an average of 12.6 to 7.2. That’s a fall of almost 43 per cent.
The East Midlands has also seen a stark fall, with portfolios dropping by almost 34 per cent to 7.2 properties from an average of 11.8 last year. This was followed by the North East where portfolio sizes fell by 17 per cent.
The firm suggested that regions with lower house prices are attracting new investors with small portfolios, which may be contributing to this drop in portfolio size.
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By contrast, portfolio sizes have grown substantially over the period in the East of England. Last year the typical portfolio stood at 6.4 properties, but this moved to 9.2 per cent in the first quarter of 2023.
Other regions to see increases include Yorkshire and the Humber (11.1 per cent), the South East (10.1 per cent) and the West Midlands (8.2 per cent).
Marc von Grundherr said government changes around the taxation of the rental sector had made it harder for landlords to make a profit, and combined with the incoming minimum energy efficiency rules and elimination of Section 21 evictions meant some landlords were looking to sell up.
He continued: “There are alternative challenges associated with offloading buy-to-let portfolio properties at present. While many of our landlords are disgruntled due to rising mortgage costs, they understand the difficulties of the resale market in the current climate. As a result, they are choosing to keep hold of their current investments for the mid-term until market values strengthen.”