More than eight in 10 professional property investors plan to expand their portfolios during the next 12 months despite rising operating and compliance costs, latest Handelsbanken research reveals.

The bank’s fifth annual Property Investor Report found that 84% intended to increase their holdings, up from 54% in its 2025 survey.

Among those planning to expand, 70% cited buying opportunities or valuations, 58% pointed to strong rental demand and 33% identified the availability of finance as a factor.

Almost all respondents (93%) expected their portfolio value to increase during the coming year, including 38% anticipating a significant rise.

The findings were based on a survey of 200 UK real estate investors, property management professionals and landlords.

COSTS CAUTION

However, growing confidence was accompanied by greater caution over costs, tenant risk and portfolio performance.

Almost two-thirds of respondents (63%) had raised rents because of higher costs, while 41% had changed their preferred tenant profile by, for example, prioritising applicants considered lower risk.

In response to the Renters’ Rights Act, 59% were tightening their tenant selection criteria and 44% were considering increasing rents earlier than planned.

Maintenance and repairs were the most commonly cited source of higher costs at 45%, followed by insurance at 41% and energy-efficiency improvements at 40%.

One in five investors had sold properties because of rising costs, while 19% had removed homes from the rental market. A further 46% had delayed improvements or upgrades.

The median reported cost of complying with the Renters’ Rights Act was £5,000, while the mean was £31,411, reflecting significant differences across respondents’ portfolios.

CHANGING BEHAVIOUR

James Sproule, UK chief economist at Handelsbanken, said: “The private rented sector is not simply becoming more expensive for landlords to operate; it is becoming more selective.

“Higher costs and greater tenant rights are feeding into rent decisions, but they are also changing how professional investors think about tenant risk, affordability and long-term portfolio planning.

“For renters, that means the challenge may not only be what they pay each month, but how competitive the market feels when trying to secure a suitable home or addition to their portfolio.

“It is important to be balanced. Higher standards and stronger tenant protections are intended to improve the rental sector over the long term. But they also come with real costs, and our research shows professional investors are already adapting their behaviour in response.”

SELECTIVE ENVIRONMENT

And he added: “The picture is not one of professional investors leaving the market wholesale. In fact, many remain confident that there is value to be had and are looking to grow.

“But a confident market is not necessarily an easier market for tenants. Higher costs are making landlords more selective, and that could shape the experience renters have in the year ahead through higher rents, more selective tenant criteria and greater competition for good-quality homes.

“The long-term aim should be a rental sector that offers better standards, clearer rights and more resilient properties. The challenge is making sure the transition does not put further pressure on tenants who are already navigating more selective criteria.”