42% of landlords believe now is a good time to invest in property, down from 48% in the first quarter, according to the latest landlord sentiment survey from by LSL Property Services plc. However, just 2% believe it is now a good time to reduce their portfolios.

32% of landlords polled by LSL Property Services plc are likely to expand their portfolio in the coming year. The number of landlords considering leaving the sector has risen by 6% in the past three months to 19%. This figure also includes investors who are leaving the market through retirement or lifestyle reasons.

The survey evidence is supported by LSL’s latest Buy-to-Let Index, which reported the drop in total annual returns from 13.2% in April to 10.1% in July. And due to recent levelling off of house prices, an investor buying property now could expect a total annual return of 3.5%, the equivalent of £5,838, if conditions remain the same for the next year.

David Brown, managing director of LSL Corporate Client Department, said: “Rising rents and house prices offered landlords bumper annual returns at the start of the year