Landlord confidence fell across all key indicators in the second quarter of 2017, according to the latest quarterly index from BM Solutions and BDRC Continental.
The report found that confidence in landlords’ ‘own business’ and the wider ‘private rental sector’ are now at all-time lows, both down 5%.
| Confidence in near term prospects for | Q2 2017 | Percentage change |
| UK’s financial markets | +12 | -14% |
| Capital gains | +29 | -5% |
| Rental yields | +49 | -2% |
| Own letting business | +36 | -5% |
| Private rental sector | +19 | -5% |
Despite the dip in landlord confidence, landlord profitability remains high, with 86% of landlords making a profit from their lettings business. Almost a third of landlords (31%) generate a full time living from their rental portfolio and over half (55%) use the income to supplement their day job earnings.
The proportion of landlords looking to expand their portfolio has risen from an all-time low of 13% to 15% in Q2, although one in five landlords are planning to reduce the number of properties in their portfolio in the next year. Landlords with 11+ properties are most likely to be looking to divest.
Tenant demand softened further during Q2, with almost one in five landlords (19%) reporting a decline – the highest level since the report began – driven primarily by central London where this figure rises to 44%.
Phil Rickards, head of BM Solutions, said: “Landlords are feeling somewhat gloomier in the second quarter and we know some are finding it difficult to adjust to the recent tax changes, which is why those with portfolios of over 11 are most likely to be looking to decrease the number of properties they own in the next year.
“This quarter the report has also highlighted declining tenant demand and a fall in intentions to raise rents. However, even against this backdrop, along with profitability remaining high, rental yields have edged up from the first quarter to 6%.”
