Most residential limited company landlords expect rental yields, demand and property values to increase over the next 12 months, even as they prepare for higher mortgage costs and tighter regulation.
A significant majority of landlords operating through limited company structures remain upbeat about the year ahead, according to Kensington Mortgages’ latest buy-to-let barometer.
The survey found that 84% expect rental yields to increase over the next 12 months, while 89% said they felt confident about the market outlook. Four in five landlords expect rental demand to rise and 77% believe property prices will increase over the same period.
The figures point to a market in which landlords still see scope for growth, despite persistent pressure on costs and a regulatory backdrop many expect to become more difficult.
More than three quarters of respondents, 77%, said they expect mortgage costs to increase over the next year. At the same time, 81% reported that running costs such as repairs, insurance, utilities and maintenance have already risen over the past 12 months. Nearly four in five, 79%, said they expect the regulatory environment to become more challenging.
Interest rates were identified as the biggest single factor shaping landlord confidence, cited by 31% of respondents. Regulation followed on 26%, with property prices and rental demand both on 25%. The wider economic outlook and mortgage availability were each cited by 22%, while 20% pointed to taxation.
Even so, most landlords appear unwilling to retreat. Just over half, 53%, said they plan to keep their portfolio at its current size over the next 12 months, while 38% intend to expand. Only 8% said they are considering reducing their holdings. Kensington also found that 74% of landlords currently find it easy to access buy-to-let mortgage finance.
The research suggests the limited company structure remains central to many landlords’ strategies. More than half of respondents, 53%, said their entire portfolio is held within a limited company. Among landlords with both personal and company-owned properties, average gross rental yields were 5.04% on limited company portfolios, compared with 4.88% on personally held properties.
In terms of stock mix, family homes were the most common asset type, held by 40% of respondents. HMOs with six bedrooms or more followed on 35%, ahead of single-tenant residential properties on 33% and smaller HMOs on 27%. Holiday lets and student accommodation were less common, at 16% and 12% respectively.
Recent acquisitions have largely focused on family homes, single-tenant properties and larger HMOs. Looking ahead, landlords appear keen to broaden their exposure further. Almost all respondents, 95%, said they are looking to diversify into different property types, with corporate lets the most popular target at 37%.
Allison Buckley, chief executive officer of Kensington Mortgages, said: “The latest findings from our buy-to-let Barometer underline the resilience and professionalism of today’s limited company landlords.
“Despite experiencing higher operating expenses and anticipating increased mortgage costs and greater regulatory complexity ahead, landlords remain firmly committed to the sector – underpinned by strong tenant demand and expectations of improving yields.
“What’s particularly notable is that confidence is not translating into complacency. Many landlords are actively reviewing and diversifying their portfolios, with growing interest in corporate lets and larger HMOs, demonstrating a clear focus on long-term income and adaptability.
“The limited company structure continues to play a central role in this evolution, with yields marginally higher on company-held portfolios compared to personal holdings.
“As the market continues to evolve, specialist lenders have an important role to play in providing the flexible, tailored financing solutions that professional landlords need to navigate change and seize opportunity.”
