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30% of remortgaging landlords plan to release equity

Jake Carter

August 16, 2021

more2life

An estimated 30% of landlords who plan to remortgage within the next 12 months intend to release equity from their portfolios, according to Foundation Home Loans.

The research, conducted by BVA BDRC, showed that portfolio buy-to-let (BTL) landlords are more likely to want to remortgage in the next 12 months (43%) compared with their ‘consumer’ landlord counterparts (20%).

Portfolio landlords were found to be significantly more upbeat about the prospects for their own businesses; 46% said they felt either ‘good’ or ‘very good’, compared with just 35% of single property landlords.

This rose to 50% among landlords with more than 20 properties in their portfolios.

In Q2 2021, the typical portfolio was worth around £1.25m, generating an annual gross rental income of £54,000.

Based on an average Q2 portfolio of 6.9 properties, the typical individual value of a property was £182,609.

Portfolio landlords with more than four mortgaged properties had average portfolio values at over £2m (£2,040,000) for the first time since Q3 of 2020.

The current average loan-to-value (LTV) of a portfolio of any size was 49.5%.

Furthermore, 40% of all properties owned within an average portfolio were owned outright, presenting existing landlords with an opportunity to tap into equity levels which might have been recently boosted by increases in house values.

George Gee, commercial director at Foundation Home Loans, said: “We’ve seen the buy-to-let market moving steadily towards a greater level of professionalism for some years now, and this has meant a growing number of landlords are now defined as ‘portfolio’ operators and have long-term plans which involve making the most out of their properties.

“The research shows a number of key portfolio landlord intentions, particularly around extracting equity from their properties.

“Over the past year, in many areas of the country, we’ve seen double-digit house price growth, and even without access to the stamp duty holiday, the intention to remortgage to take out that increased value to purchase more has grown.

“It means advisers are likely to see a growing spike in buy-to-let remortgage advice demand, and the positive news is there are very competitive product options for all types of portfolio landlords at present.

“At Foundation we’ve focused recently on improving our offering to portfolio landlords, not just in terms of price, but also in terms of helping them cut back on upfront costs such as fees and looking at ways we can make the process to a mortgage as seamless as possible.

“Portfolio landlords are likely to grow in number in the months and years ahead, and as specialist lenders in this space, we will continue to develop the product options and flexible criteria to help them get the most out of their existing properties to expand their letting footprint.”


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