Professional property investors are continuing to back the private rental sector despite mounting regulation and economic uncertainty, according to Handelsbanken’s latest Property Investor Report.

The bank’s fifth annual survey, based on responses from 200 UK real estate investors, landlords and property management professionals, suggests predictions of a large-scale landlord exodus have yet to materialise among more established investors.

Almost all respondents, 93%, expect their portfolio values to increase over the next 12 months, while 84% said they intend to expand their holdings. That compares with 54% who planned portfolio growth in Handelsbanken’s 2025 survey.

Just 1% of respondents said they planned to leave the market entirely within the next year.

The findings come after the outbreak of conflict involving Iran and amid continued uncertainty surrounding the Renters’ Rights Act, rising operating costs and affordability pressures across the private rental sector.

According to the report, the market is becoming increasingly dominated by larger and more professionalised landlords with the scale and operational capacity to manage tighter regulation and changing market conditions.

Among investors planning to expand, 70% cited buying opportunities or attractive valuations as the main driver, while 58% pointed to continued strength in tenant demand. A further 33% highlighted financing availability.

CHALLENGING ENVIRONMENT

James Sproule, chief economist at Handelsbanken UK, said: “Our survey suggests there has not been a notable exodus of professional investors from the UK property market.

“Instead, landlords are adapting to a more challenging environment by becoming more selective, more operationally disciplined and more focused on scale.

“The Renters’ Rights Act, higher costs and geopolitical volatility are all making property investment more complex.

“That does not mean professional investors are walking away, but it does mean the sector is likely to look different, with larger and more strategic landlords better placed to absorb cost, manage risk and take advantage of opportunities.”

INVESTORS ADAPTING TO REGULATION

The report suggests the Renters’ Rights Act is influencing landlord behaviour, although not necessarily prompting widespread disposals.

Nearly six in 10 respondents, 59%, said they are tightening tenant selection criteria, while 56% are investing more heavily in property condition or amenities. Meanwhile, 44% said they are considering bringing forward rent increases.

Only 26% said they were considering selling some or all of their properties, while 3% said they were shifting their focus into other sectors.

Handelsbanken said the findings point to a more disciplined and business-like approach among professional landlords, with investors increasingly operating with clearer long-term strategies and formalised operating models.

FUNDING SOLUTIONS

Brian Lehane, corporate account manager at Handelsbanken’s Northampton branch, said: “Our report highlights that the majority of investors are looking to grow their portfolios despite the economic challenges that persist, and we are seeing that translate to increased activity in our region and optimism for future prospects.

“With key metrics continuing to hold up, particularly capital values and rental growth, Handelsbanken continues to support growth aspirations with flexible funding solutions.”