Property investors look to pay down debt as interest rates rise
More than nine in ten large landlords are seeking to pay off debts as rising interest rates erode their profits, according to new independent research conducted on behalf of property business expert, Handelsbanken.
Handelsbanken’s Professional Landlords Survey found that 91% of respondents are looking to pay down the debt on their portfolios to ensure they have optimum yield and risk/return profiles.
James Sproule, UK chief economist at Handelsbanken, said as rates continued to rise its residential property prices were unlikely to stabilise in the short term.
“In contrast to owner-occupiers, professional landlords will often have a more detached and less emotional view of property values and are more likely to act in a way that recognises market realities.” Sproule said, adding: “That’s why we are seeing landlords sensibly paying down debt, while others are increasingly alert to opportunities in sectors such as offices.”
But in a sign of resilient sentiment among professional property investors, the survey also found that 59% of respondents intend to increase the size of their portfolio over the next 12 months.
Simon Bradley, chief credit officer, at Handelsbanken said: “While our Professional Landlords Survey shows how they are positively managing the current challenges within their sector, it also reveals a clear ambition for future investment, by taking advantage of forecast market movements and adding value through active management.”
The research was based on a panel of 200 professional landlords across the UK. On average, each of the respondents’ portfolios comprised 29 properties, with an estimated market value of £14m.
London remains the most attractive region over the next 12 months followed by the South East, while less attractive for property investment are Yorkshire and the Humber and the West Midlands, Handelsbanken said.