Despite inflation and mortgage volatility over the last year, more than a third (34%) of buy-to-let landlords are gearing up for further expansion in next 12 months. They are shrugging off tough market cautiousness, according to a nationwide report from mortgage lender Together.
Indeed, while 10%1 of all respondents admitted their reservations about the outlook of their business ahead of 2024, 68% feel optimistic, with a quarter planning to refinance their properties to support business objectives over the next year.
The findings come ahead of the launch of Together’s report,Opportunities and Outlook; the future of commercial property, featuring an outlook on the commercial sector for the next three to five years, written by economist Rob Thomas.
The study indicates that while 44% of respondents are de-risking and shrinking portfolios or exiting the market altogether (14%), the vast majority are committed to increasing their portfolios now that Q4 2023 saw inflation finally return to below 5%.
More than half, 58% of all respondents would recommend others invest in the UK commercial property market now despite the events of the last year.
While 16% of commercial landlords are exiting altogether, doors are being opened for a new generation of professional landlords and developers to step in.
Regionally, those surveyed in London, West Midlands and in the Northwest of England will be buying more properties over the next year. And not all are entering the commercial market via traditional routes, 10% of all respondents admitted they were influenced by social media and property influencers seen online.
Together’s study also reveals that 42% of all respondents would prioritise using a specialist lender rather than mainstream in the next 12 months, should they require additional financing for commercial property cases.
The top three reasons for this are; specialist lenders are prepared to take greater risk, grant larger loans, and support entrepreneurial plans (39%), they are the fastest (29%) and they provide the best level of service (also 29%).
However, the study says government support is a crucial part of the puzzle to be able to address the current lack of stock, allowing developers and investors to realise their expansion plans from next year onwards.
The Treasury’s pledge to remove the red tape surrounding planning applications is vital to improve time delays, but there are other factors inhibiting growth, including labour shortages in the construction industry.
Ahead of a new political year, Together’s research found one in five (20%) UK property professionals are keen for the Government to address the major skills shortage within the building trade as a priority, with 18% wanting a review of rising costs for materials and labour.
Together group channel development director Chris Baguley commented: “The short, sharp shock in interest rates since the Covid years triggered some cautiousness in the commercial market while investors were trying to predict where the peak would be.
“With rates settling, while there is still an overall flattening; activity is returning as the sector reacclimatises to the new environment.
He added: “What continues to be apparent is the clear optimism and enduring health of the commercial sector. The winners of 2024 and beyond will be those who are able to seek out new opportunities, spot where best to create value and use the right financing to capitalise on emerging growth sectors.”
