Research carried out by Pegasus Insight found that landlord confidence has increased, despite the introduction of higher Capital Gains Tax (CGT) in the October Budget and the potential impact of the Renters’ Rights Bill.
According to the Landlord Trends report for Q4 2024, 37% of landlords felt ‘good’ or ‘very good’ about their prospects, up from 33% in Q4 2023.
Landlords who reported making a ‘large profit’ were most likely to feel upbeat, with 71% expressing optimism, while this fell to 33% for those making a ‘small’ profit.
On a quarterly basis, there was a small uptick in optimism about business prospects, from 32% in Q3 2024 to 37%.
However, concerns over the potential impact of the Renters’ Rights Bill remained.
Three quarters of landlords believed the Bill would be negative for their own lettings business, with 43% expressing significant concerns.
This rose to 65% who believe the Bill would have a significant negative impact on the private rented sector more broadly.
Despite 73% of landlords increasing rents in 2024, more than 80% claimed they were renting out at least one property at below market rates.
The average achieved rental yield remained close to the Q3 2024 10-year high at 6.4%.
Landlords letting properties at below market rates believed they were subsidising an average of 4.7 properties, typically by £144 each per month.
Bethan Cooke, director at Pegasus Insight, said: “Improving landlord confidence is testament to the resilience of the buy-to-let sector and the strength of the fundamental economics underpinning this market, fundamentals which the Renters’ Rights Bill will only serve to reinforce.
“If this new Bill forces more landlords to exit the market, it will further deepen the supply/demand imbalance which pushed average rents to unprecedented levels last year.
Cooke added: “What’s more, as the legislative threat builds, so does the pressure for landlords to pre-emptively increase rents to future-proof their businesses.
“Those landlords charging below-market rates may currently be compromising on revenue in order to retain good tenants, but may not feel they have the option of continuing to do so in a more restrictive environment.
She said: “The long-term profitability trend for the buy-to-let market is stable, and prospects for the sector remain very good.
“So, while the Renter’s Rights Bill may make life more difficult for landlords, the unintended consequences are likely to be much harder on tenants themselves.”
