Challenging economic times are making landlords think creatively

LARGE portfolio professional landlords[1] are looking to pay down debt as they focus on optimising their portfolios in the face of challenging economic conditions, new independent research conducted on behalf of property business expert Handelsbanken shows.

This year's Handelsbanken Professional Landlords Survey; based on nationwide research among large UK investors with an average of 29 properties worth c £14 million each; shows professional property investors are acutely aware of the risks and challenges facing the sector.

It found 91% are looking to pay down the debt on their portfolios in response to rising interest rates with a focus on ensuring they are truly optimised in terms of yields and risk/return profiles.

66% of professional landlords disposing of assets say they are bearish about the market while 24% say they cannot afford to upgrade portfolios to comply with new sustainability regulations such as Energy Performance Certificate rules in England and Wales.

However, given market uncertainty, many investors will likely be waiting for opportunities to buy at reduced cost with a view to longer term value creation, re-purposing assets (as Handelsbanken is seeing) and / or capitalising early on shifts in working patterns back towards more office usage.

That belief is also reinforced by the fact that 58% of our sample said they are looking to increase their exposure to commercial offices, and just over 50%, perhaps surprisingly, are looking to increase their exposure to retail property. The research shows that there is still strong confidence in UK property as an asset class.

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. In our experience of the market, investors will require significant investment to meet current tenant demands for greater amenities to achieve meaningful returns."

The research comes amid heightened interest in the property sector with both residential and commercial areas undergoing price corrections. Higher interest rates and lack of housing supply are also presenting challenges.

James Sproule, UK Chief Economist at Handelsbanken said:- "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. That's why we are seeing landlords sensibly paying down debt, while others are increasingly alert to opportunities in sectors such as offices. More broadly, with interest rates still rising, it is difficult to see residential prices stabilising in the short term. At least with inflation remaining well above its target level nominal prices will not reflect the real full impact of price declines. Looking forward, the peak of interest rates, likely to be in August, will set the scene of a price recovery in the autumn and early 2024."

Read the 2023 Handelsbanken Professional Landlords Survey.  This research follows Handelsbanken's inaugural property report in 2022, conducted amongst SME landlords with a minimum of 4 properties in their portfolio. On average, respondents owned 7.5 properties with an estimated total market value of £2.76 million.

Liverpool 1 Foundation celebrates £3m grant milestone

THE Liverpool 1 Foundation, which invests and supports young people's mental health across the Liverpool City Region, is marking a huge milestone with a total £3 million being donated to local organisations since its inception.  Investing in projects that are dedicated to improving mental health and wellbeing, the Foundation has so far supported almost half a million young people through more than 400 grants during the last 14 years.

The milestone comes as Liverpool 1 kicks off its 15th Anniversary celebrations, as the retail and leisure destination looks back on the highlights since its arrival at the heart of the City Centre. As part of the Liverpool 1 Foundation's vital work, it awards grants to youth groups and organisations across Liverpool, Halton, Knowsley, Sefton, St Helens and Wirral.

From projects running mindfulness and yoga sessions to those supporting children through bereavement, the Foundation has worked with a total of 314 groups, each 1 dedicated to improving local young people's wellbeing. And following the Pandemic and its impact of youth mental health, this year the Liverpool 1 Foundation has awarded grants to specifically fund mental health champions at organisations across the Region.

Among those receiving a donation is Brunswick Youth and Community Centre in Bootle, which has worked closely with the Foundation for around 13 years.

Keith Lloyd, centre manager at Brunswick Youth and Community Centre said:- "We identified that mental health issues for young people was their major concern. With the help of Liverpool 1 Foundation, we were able to employ a part-time mental health worker, who is their "go-to" person. Already, she has helped and signposted a number of young people who would have likely fell through the net if it wasn't for this new intervention. We would like to take this opportunity to thank Liverpool ONW for having the vision to invest in young people's mental wellbeing and for their support with many other projects which have benefited our community."

Managed by the Community Foundation for Merseyside (CFM) on behalf of Liverpool ONE, the Liverpool 1 Foundation was set up in 2009, just 1 year after the first phase of Liverpool 1 opened.

Since its launch, the Foundation has shifted its focus so that it awards grants that specifically benefit future generations' mental health and more recently to directly fund mental health champions at local youth clubs and community centres, a change that came in response to what local people needed, according to CFM chief executive Rae Brooke.

Rae said:- "As a result of our research and community engagement the Liverpool 1 Foundation responded on a significant scale to the mental wellbeing needs of children and young people across the Liverpool City Region. The subsequent impact has been immense, and we are delighted that Liverpool 1 continues to be our largest corporate donor with a continued commitment
to the future needs of the community."

Donna Howitt, Place Strategy Director at Liverpool ONE, said:- "We are incredibly proud of the Liverpool 1 Foundation reaching £3 million of grants distributed across local groups. Helping and supporting young people's mental health is at the heart of our commitment to local communities. To be able mark this in our 15th year is fantastic and highlights the vital work that so many organisations are doing right across the Liverpool City Region to help improve young people's lives. We're looking forward to building on our work with the Liverpool 1 Foundation and continuing to support those who need our funding to enhance the mental health of our future generations."

For more information about the Liverpool 1 Foundation, visit:- Liverpool-One.Com.