Landlord confidence has improved across all metrics year-on-year, with many feeling confident about the opportunity for capital gains on their properties, the PRS as a whole, and the UK financial market, reveals new research from Foundation Home Loans.
Quarter-on-quarter results show landlord confidence in their own lettings business remains stable, with rental yields the only metric of the five to dip quarter-on-quarter.
The fall in rental yield confidence stems from a perception that tenant demand has decreased for the first time since Q2 2022.
63% of landlords now report increased tenant demand in the last three months, down by 8% on the previous quarter; this is primarily driven by a higher proportion of landlords reporting they are ‘unsure’; only a minority at 4% report decreasing demand.
Those with larger portfolios are much more likely to be making a profitable, full-time living from their properties, and the proportion of those able to do this continues to increase in line with the size of the portfolio.
Those landlords who only own a single property are reported to have the least confidence in terms of rental yields.
As reported in the last iteration of the survey results, landlords seem pleased with the government’s decision to put off mandatory EPC levels of C and above for PRS properties by 2025/2028.
Some 64% of all landlords said they were satisfied, rising to 80% for those who own 11-plus properties.
However, three landlords still expect the legislation to be introduced in the future; on average, they anticipate this will be done in three and a half years.
Grant Hendry, director of sales at Foundation Home Loans (pictured above), said: “There is a renewed sense of calm and stability from these latest set of landlord results, and while it’s clear there are still some considerable concerns for active participants in the PRS, it’s positive to see confidence generally rising across most of the metrics.
“After a very challenging year in 2023, it’s perhaps not surprising to see landlords being somewhat cautious about what the future might bring, particularly in terms of ongoing finance, but also tenant demand, rental yield, and capital increases.
“Those fundamentals aren’t really changing, but they have clearly steadied somewhat, and while there will continue to be a large number of landlord borrowers coming off their deals throughout 2024 and beyond, the rate environment has shifted which should hopefully allow them to meet affordability criteria, secure the levels of loans they need and keep any increases in mortgage payments down.
“Finally, it is interesting to hear that most landlords believe a future government is likely to introduce the minimum EPC levels, which were recently canned by this administration.
“According to the survey, 36% of rental properties have an EPC rating of below C currently, and this landlord cohort tends to believe they will have to improve this, possibly in just over three years’ time.”
