According to a survey conducted by a leading buy-to-let bank, landlord confidence has seen a strong rebound in recent months. All aspects of landlord confidence, measured by research agency BVA BDRC on behalf of Paragon Bank, improved in the third quarter compared to the second quarter. This increase in confidence can be attributed to more stable market and economic conditions.
The most significant improvement, with a rise of 16 percentage points since the second quarter of 2023, was seen in the outlook for rental yields. In the third quarter, 49% of landlords rated their expectations for this aspect of their lettings business as either good or very good. Furthermore, there was an 11 percentage point increase in the proportion of landlords who expressed confidence in the prospects of their own lettings business, marking the second largest rise.
Landlord confidence in the private rented sector also saw an eight percentage point increase compared to the second quarter, while expectations for capital gains climbed by six percentage points. However, optimism for the UK financial market experienced a more modest increase of two percentage points.
The research, which surveyed nearly 800 landlords, highlights that landlords are more confident about all aspects of letting, except for capital gains, compared to the same period in 2022. This is particularly true when it comes to rental yields and their own lettings business.
Richard Rowntree, the managing director of mortgages at Paragon Bank, expressed his satisfaction with the lift in optimism among landlords, which reflects the return of stability to the market and economy. Rowntree emphasized the crucial role that landlords play in the UK’s housing provision and the importance of their confidence in the investment environment, especially at a time when demand exceeds supply. While there is still work to be done to improve the private rented sector for both tenants and landlords, Rowntree believes that recent policy announcements have had a positive influence on how landlords perceive the sector and their businesses.
He also noted that the survey was conducted before it was announced that the removal of Section 21 would be delayed until court reforms are implemented and a new ground for possession for student landlords is established. Rowntree believes that these significant changes to the Renter’s Reform Bill are likely to be welcomed by landlords and could contribute to a more positive outlook.