Long-term demand from tenants creating secure rental streams, and a desire to supplement retirement income, remain the primary drivers for landlords looking to boost their property portfolios. 

In its Next Generation Landlord Report, Paragon Bank identified the key factors that are motivating ambitious buy-to-let investors. The report surveyed 500 landlords who currently owned up to three properties, but were looking to make further purchases. 

It found that six out of 10 of these investors cited ongoing demand for rental properties as a key factor in their decision to expand their portfolios. Over half of these landlords (54%) said they were looking to add to their portfolio as a means of supplementing their future retirement income. 

Capital appreciation was also a primary driver for investment, though seen as less important than income. However, almost half of respondents (47%) said the long-term growth in house prices influenced their investment decisions. 

The report found that a third of these landlords (34%) prefer property as an investment asset over other options. 

As well as looking at the reasons why landlords were expanding portfolios, the report also sought to identify the factors that led them to invest in the rental market initially.  

Friends and family played a significant role for many, with 43% citing them as a primary motivation. However, a large proportion of landlords (39%) started renting out their first property by accident — often as a result of purchasing a second home or inheriting property.

When asked why they chose property over other investments, landlords emphasised its tangible nature (67%), wealth-building potential (54%), and the ability to pass it on as an inheritance (53%).

Paragon Bank’s managing director of mortgages Louisa Sedgwick says: “The rental market is set for continued growth, driven by projected population increases of around 10% over the next decade. This favourable market outlook is underpinning the investment decisions of aspiring landlords.

“The research also demonstrates a clear focus on long-term planning, with over half of landlords building portfolios to support their retirement. This indicates a strong commitment to the rental sector and is essential for the overall health of the private rented market.”

She adds: “The rental market is attracting a growing number of landlords often inspired by friends and family, or who have discovered the benefits of property ownership through other circumstances. 

“These aspiring landlords are committed to providing rental homes for the future and require a supportive regulatory and fiscal environment to continue their investment activities.”