The latest quarterly index from BM Solutions shows that only 13% of landlords are planning to add to their buy-to-let portfolio, the lowest number since records began back in 2006.
The index figures, which are based upon data from 754 online interviews with National Landlords Association members and associates in March this year, reflect a clear lack of optimism among landlords about the prospects for their businesses in the current market conditions.
What Caused The Dip?
The record-breaking dip in the levels of landlords actively investing in private buy-to-let portfolios appears to have been driven by two main factors:
- A slowing of tenant demand, especially in central and outer London where the proportion of landlords reporting falling tenant demand now appears to outnumber those experiencing growth. For example, 17% of landlords overall have reported seeing this fall in tenant demand.
- Recent tax and regulation changes which have damaged landlord confidence in the market, and made landlords feel less willing to take unnecessary risks with their portfolios.
Not All Doom And Gloom
Despite these negative findings, the same index data shows that levels of landlord confidence is stabilising and have returned to where they were in the first quarter of 2016.
It is also important to acknowledge that even though the overall number of landlords looking to expand their portfolios has bottomed-out, the average portfolio value is has increasing slightly.
South East Optimistic
According to the index data, although optimism about the prospects of their own letting businesses are very low for landlords in Wales and Scotland (only 26%), nearly half of those in the South East (48%) are now felling optimistic.
Rents
Nearly half of the landlords surveyed (48%) reported rent increases in their area (down on last quarter), and only 42% have increased rents across their own portfolio in the last year.
What Does This Mean For Private Landlords?
The pressures of tax changes, and a fall in tenant demand in key housing areas have clearly knocked levels of optimism, and have, understandably made landlords around the UK more cautions about any portfolio expansion plans for the time-being.
Confidence is, however, showing signs of being boosted again by positive economic indicators such as the doubling of the UK’s financial markets, and the stability of the UK private rental sector and rental yields over the last year. The index figures also show more stable levels of confidence in capital gains, and it may not be too long before the UK’s landlords feel optimistic enough to re-examine shelved portfolio expansion plans.
