Landlord confidence is continuing to grow with many reporting increased confidence about both capital gains, the private rental sector as a whole and the wider financial market.

Foundation Home Loans’ latest BVA BDRC Landlord Panel research report for the last quarter of 2023 reveals landlord confidence in their own lettings business remains stable with rental yields the only metric of the five to dip quarter-on-quarter.

TENANT DEMAND

The fall in rental yield confidence stems from a perception that tenant demand has decreased for the first time since Q2 2022.

Six out of 10 (63%) landlords now report increased tenant demand in the last three months, down by 8% on the previous quarter, mostly driven by a higher proportion of landlords reporting they are ‘unsure’ and only a minority (4%) reporting decreasing demand.

Regionally, landlords in the North West report the strongest increases in tenant demand, followed by Yorkshire and the Humber but landlords in the West Midlands reported a notable decrease, down by 26% quarter-on-quarter.

Despite increasing confidence the latest results also reveal a more cautious landlord community. 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 and the sector as a whole.

Challenging

Grant Hendry (main pic), Director of Sales at Foundation Home Loans, says: “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 private rented sector, 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.

“Clearly, tenant demand has been running at very high levels and coupled with the supply situation and the need for landlords to cover larger mortgage costs has meant rents have risen significantly in many areas over the past 12 months.”

Chancellor Jeremy Hunt will deliver the Spring Budget on March 6.