Landlord optimism remains robust, with year-on-year improvements across all metrics, including prospects for capital gains, confidence in the private rental sector (PRS), and the UK financial market, as revealed by the latest BVA BDRC Landlord Panel research for Q4 2023. This marks a continuation of the positive sentiment from Q3, following a year of negative scores.
The quarter-on-quarter analysis indicates stability in landlords’ confidence in their lettings business, despite a slight dip in rental yield confidence due to perceived lower tenant demand — the first such decline since Q2 2022. Current reports show 63% of landlords experiencing increased tenant demand over the past three months, a decrease of 8% from the previous quarter.
Regionally, the North West leads in tenant demand growth, with Yorkshire and the Humber following, whereas the West Midlands saw a significant quarter-on-quarter decline.
The survey, conducted for Foundation Home Loans, comprised 398 online interviews with landlords during December, and suggests a cautious landlord community, with larger portfolio owners more likely to profit full-time from their properties, a likelihood that increases with portfolio size.
Single-property landlords exhibit the least confidence in rental yields and the PRS overall.
Notably, landlords show less interest in divesting their properties, with planned divestment lower than early last year’s figures, and those intending to acquire properties rising by 3%. Landlords with larger portfolios are again more likely to expand at 19%.
The survey also reflected landlords’ satisfaction with the government’s postponement of mandatory EPC ratings of C or above for PRS properties by 2025/2028, with 64% approving, increasing to 80% among those with 11 or more properties. Nonetheless, three-quarters of landlords expect the legislation to be enacted eventually, predicting this will happen within the next three and a half years on average.
Foundation Home Loans continues to cater to landlord needs with its ‘Buy-to-Let by Foundation’ range for individual and portfolio landlords, as well as its new ‘Solutions by Foundation’ suite, addressing more specialist buy-to-let requirements.
Grant Hendry, director of sales at Foundation Home Loans, reflected on the findings: “There is a renewed sense of calm and stability from these latest set of landlord results… It’s positive to see confidence generally rising across most of the metrics.”
He acknowledged the high tenant demand and rent increases driven by supply issues and mortgage costs but noted a stabilising environment. With changing rate environments, he anticipates landlords will meet affordability criteria and manage any mortgage payment increases.
Hendry also pointed out that portfolio landlords are more likely to be active in the market, and highlighted the anticipation of future EPC regulations, with landlords preparing for potential property upgrades to meet greener standards.
