The average market value of landlords’ investment property reached a record high of £1.7m during the third quarter of 2018, Paragon’s latest PRS Trends has found.
Average portfolio values are now 6% higher than the £1.6m peak recorded 10 years ago immediately prior to the global financial crisis. During the banking crisis, portfolio values fell sharply, dropping back to £1.35m in Q1 2009.
John Heron, director of mortgages at Paragon, said: “Landlords operating in the buy-to-let sector have been subject to unprecedented tax and regulatory changes and they are understandably cautious about the future.
“Many have already taken action to mitigate against the impact of these changes, including the sale of some of their properties and a reduction in gearing.
“While the increase in portfolio values will provide some cheer, landlords continue to face significant headwinds as they prepare for the first-phase impact of the mortgage interest tax relief removal and potential economic uncertainty surrounding Brexit.”
At the time of the crisis, landlords had an average of 12 properties in their portfolio and maintained their portfolios at around this size throughout the crisis period, before beginning to add to them once again from 2010 onwards. After peaking at 14.8 properties in Q3 2014, the average portfolio size now stands at 12.6 properties.
Despite record portfolio values, landlord optimism about the future remains subdued.
Just over one in 10 landlords (11%) said they feel optimistic about the prospects for their property portfolio over the next 12 months and two times as many (21%) expect to sell some of their buy-to-let properties than those who expect to buy (9%).
Even assuming their portfolios remain unchanged in size, more landlords expect to see a slight drop in their portfolio value over the next 12 months than those who anticipate an increase.