Prospects of reduced returns over the next five years are likely to lead to a period of consolidation and a slowdown in the growth of the buy-to-let sector but not a significant withdrawal from the market, according to Savills’ latest buy-to-let survey.

The survey of just under 400 buy-to-let investors identified four key reasons for this conclusion:

The vast majority of owners view their investment as long term, with 55% wanting to retain their portfolio for at least 10 years and 71% relying on their investment to provide part of their pension. There was a dominance of large investors with an equity cushion – 70% of landlords owning more than 20 properties have more than 25% equity in their property holding. The majority of owners were able to meet existing borrowing costs out of rental income. Only 10% of owners would currently consider an outright sale even in the event of further pressure on returns.

Jacqui Daly of Savills research said: “We expect this slowdown in the expansion of the sector to be accompanied by a change in the profile of properties acquired by buy-to-let investors. There will be a shift away from new build flats where returns are likely to be under the greatest pressure. Whilst 55% of owners own new build flats within their portfolio, only 24% of respondents would look to expand their portfolio by acquiring this property type.”