Landlord confidence at highest level for 18 months

Michael Lloyd

July 25, 2018

Confidence in landlords’ own lettings is at its highest level for 18 months and 8% up on a year ago, BM Solutions has found.

Confidence in the UK’s financial markets and capital gains increased by 3% and the private rental sector by 2% year on year. On a quarterly basis rental yields was the only indicator going down, with a 3% fall.

Although landlords’ confidence in rental yields dipped in the second quarter of 2018, the average rental yield currently being achieved of 6.2% is at its highest since Q4 2014.

Phil Rickards, head of BM Solutions, said: “It is encouraging to see that confidence across all of the key indicators has either increased or stayed the same on a 12 monthly basis and is particularly strong when landlords are considering their own lettings business.

“It’s a promising sign for landlords that rental yields are on the increase and are recovering some of the ground they have lost in recent years.”

The quarterly BM Solutions/BDRC Landlords Panel found that landlords are feeling more positive across four of the five key confidence indicators than they were a year ago. The remaining one fifth , which was rental yields, was static.

Although landlords’ confidence in rental yields dipped in the second quarter of 2018, the average rental yield currently being achieved of 6.2% is at its highest since Q4 2014.

Landlords in Wales and the East of England are generating the highest rental leads of 6.9% and 6.7% respectively. Rental yields are lowest in the North East (5.7%), the South East (5.8%) and Outer London (5.9%).

Perceptions of tenant demand vary significantly cross the country with landlords in the East and West Midlands most likely to have experienced an increase in demand over the last three months (42% and 33% respectively).

The largest increases in perceived tenant demand over the last quarter were seen by landlords in the East Midlands (+14%), Yorks & Humber (+11%) and the West Midlands (+7%).

Tenant demand is lowest in inner and outer London and the North East, although Scotland has the largest fall in perceived demand over the last three months at -15%.

Looking at the plans landlords have for the next 12 months, those in the East Midlands (23%) and North East (21%) are most likely to expand their portfolios.

Landlords in Central London and the South East are least likely to be looking to increase the number of buy-to-let properties they own (8% and 9% respectively).

Confidence in near term prospects for (% feeling good or very good) Q2 2017 Q1 2018 Q2 2018 Quarterly % Change Annual % change
UK’s financial markets 12% 15% 15% 0% +3%
Capital gains 29% 30% 32% +2% +3%
Rental yields 49% 52% 49% -3% 0%
Own letting business 36% 41% 44% +3% +8%
Private rental sector 19% 21% 21% 0% +2%

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