Cost of living crisis means one in five landlords plan to reduce portfolio size

Handelsbanken research shows nearly one third of landlords are also looking to make their portfolios more energy-efficient to lower bills

New snap research from UK relationship bank Handelsbanken, carried out following the recent economic upheaval, finds that landlords are making significant adjustments to their portfolios to cater for the fast-changing macroeconomic environment.

Almost three in five (60%) landlords say they are preparing to increase rents to compensate for higher costs, with a fifth saying they are planning to sell some of their portfolio to directly combat the cost of living crisis. Around a third say they are looking for ways to make their properties more energy-efficient to combat rising fuel costs.

The study, which follows up on the bank’s recent Property Survey Report, illustrates the impact that rising energy bills and the cost of living squeeze are having among smaller professional landlords. Those with four-five properties are twice as likely to be making their properties energy efficient for instance, compared to those with more than 10 properties.

The study also shows that more than a third (34%) are cutting back on buying properties in cities as the market adjusts to changing employment practices, as more people are working from home. Almost all (93%) respondents say the current market outlook has impacted their portfolio/ investment strategy in some way, with more than half (53%) concerned they will experience more void months. The bank’s previous research on the impact of the Covid pandemic on void months, found that more than 40% of landlords had experienced more void months than usual, so the prospect of further vacancies will be of concern. 

More than one in five (21%) report that one or more mortgage deals have fallen through, with two in five (40%) adding their lender has increased the loan rate on one or more properties in their portfolio.

As a result, 45% say they are planning to purchase lower-value properties to remain under the Stamp Duty Land Tax (SDLT) threshold to combat rising costs. There could also be knock-on effects on tenants as a quarter of landlords say the current economic environment will affect the maintenance and refurbishment programmes of their portfolios.

James Sproule, UK Chief Economist at Handelsbanken, said: “The property market is entering a period of increasing uncertainty, with house prices in some areas already falling and a rising regulatory burden being seen by some landlords as a reason to reduce their exposure to the market. While the ongoing cost of living crisis might be seen as the driving factor in the buy-to-let market, equally important are the post-pandemic movement back into cities, potential buyers delaying purchases and thus looking to rent, and fewer properties, meaning those who do persevere, are likely to see higher yields. Savvy landlords are using the changes to SDLT to cost-effectively reshape their portfolios and invest in energy efficiency, something which has become an ever greater concern of potential tenants.”

To read the full Handelsbanken Property Survey Report 2022, please click the link below.

 - ENDS -

Media enquiries

Patrick Evans / Camilla Wyatt

Citigate Dewe Rogerson

Notes to Editors 

  • *Initial SME Landlord Survey Report research conducted by PureProfile in June 2022 among 120 UK professional landlords with a minimum of four properties in their portfolio. On average respondents own 7.5 properties with an estimated total market value of £2.76 million. All landlords questioned have exposure to residential property and 58% have exposure to commercial property. Follow up survey carried out in October 2022.
  • ** Handelsbanken analysis based on average house prices of 250,000 in May 2021 and 281,000 in May 2022 and mortgage rates of 3.61% in May 2021 and 4.25% in May 2022. Assumed LTV of 75% and mortgage duration of 25 years.

Information on Handelsbanken plc

Handelsbanken is the trading name of Handelsbanken plc, which is incorporated in England and Wales with company number 11305395. Registered office: 3 Thomas More Square, London, E1W 1WY, UK. Handelsbanken plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 806852.

The bank received its full UK banking licence in 2018.

Handelsbanken plc is a wholly-owned subsidiary of Svenska Handelsbanken AB (publ).

Handelsbanken was established in Stockholm in 1871 and in Sweden, it is one of the country’s leading banks with a nationwide branch network. The Bank’s home markets are Sweden, Norway, the Netherlands, and the UK. It also has operations in Luxembourg and the USA.

In the UK, Handelsbanken is a local relationship bank with a decentralised way of working, a strong local presence due to a nationwide network of branches, and a long-term approach to customer relations. Handelsbanken specialises in providing personalised and competitive banking services to both businesses, individuals, and property investors, and offers wealth and investment management services through its UK subsidiary Handelsbanken Wealth & Asset Management. Each Handelsbanken branch operates as a small business enabling it to make decisions at a local level and provide a bespoke service. The focus is always on the need of the individual customer and not on the sale of specific products.

For information regarding sustainability at Handelsbanken, please see here: