Survey of SME landlords reveals optimism for property demand

The first Handelsbanken SME Landlord Survey found a majority of landlords believe demand for both residential and commercial property will increase over the next year, and are planning to expand their portfolios as a result.

The nationwide survey of full-time landlords owning at least four properties found 86% of landlords expect a rise in demand for residential property, with nearly two-thirds (63%) confident that commercial property demand will also increase in the next 12 months. The nationwide study found 49% of landlords intended to purchase additional property, while just 7% intended to sell some or part of their portfolios.

Plans to expand portfolios are motivated by a desire to diversify their assets across different sectors and regions, rather than expectations of significant increases in rental yield.

Nearly three-quarters (73%) said their plans to buy are focused on expanding into different parts of the property market – the most attractive are houses (66%), followed by flats (38%), houses of multiple occupation (HMO) (34%) and commercial retail spaces (32%).

James Sproule, UK Chief Economist, at Handelsbanken said:

“Recent house price growth shows how property has shown its resilience against economic doom and gloom and the cost-of-living squeeze. 

“Landlords are anticipating that a shortage of rental properties will help keep prices buoyant, particularly as working patterns continue to adjust to the post pandemic world and people seek to move back to big cities, particularly in popular areas such as London, which is also seen to be better placed to ride out the next series of economic challenges and opportunities.

“Landlords went through a tough period following the COVID-19 pandemic, with residential property transactions falling by more than half and business investment contracting. But the sector has survived and is now looking forward.

“The 2022-23 financial year is forecast to see a further softening in residential property transactions as vendors wait for the right buyer rather than accept any perception of loss in value.”

The research was commissioned by Handelsbanken and conducted by PureProfile in June 2022 among 120 UK professional landlords with a minimum of four properties in their portfolio. On average respondents own 7.5 properties with an estimated total market value of £2.76 million. All landlords questioned have exposure to residential property and 58% have exposure to commercial property.

The full report is available to read here.