Tenant demand at lowest level in five years

Published on

BM Solutions’ latest quarterly index has revealed that landlord confidence ended 2017 low but relatively stable, despite one in five landlords seeing a drop in tenant demand.

The research found that tenant demand had dipped to the lowest level in five years. The proportion of landlords looking to expand in the next year was also at an all-time low of 12%.

 The quarterly BM Solutions / BDRC Continental Landlords Panel found that while confidence across all key indicators had fallen year on year, the second half of 2017 saw little change.

Prospects for landlords’ own letting business saw the biggest drop over the year, down 6%. In Q4 this reached the near record low of Q2, and was down 3% to 38%.

Confidence in the UK’s financial markets and private rental sector recorded slight uplifts in Q4, however landlords were feeling less optimistic about the near term prospects for rental yield and capital gains – both down by 2% to 47% and 30% respectively.

Landlord Confidence Indicators

Confidence in near term prospects for Q4 2016 Q3 2017 Q4 2017 Quarterly % Change Annual % change
UK’s financial markets 20% 16% 17% 1% -3%
Capital gains 34% 32% 30% -2% -4%
Rental yields 51% 49% 47% -2% -4%
Own letting business 44% 41% 38% -3% -6%
Private rental sector 25% 20% 21% 1% -4%

Source: BDRC Continental

Perceptions of tenant demand varied significantly across the country with landlords in Scotland reporting the strongest increase in tenant demand (37%), followed by East Midlands (33%) and the South West (32%).

Landlords in four regions – London (outer), London (central), North East and South East –reported negative net tenant demand (e.g. more landlords were reporting tenant demand declining than increasing).

The average rental yield in Q4 remained relatively stable at 5.9%. Landlords in the North West generated the highest rental yield of 6.7%, followed by South West (6.2%),

East Midlands and North East (both 6.1%). Those in London (outer) achieved the lowest yield of 5.0%.

Phil Rickards, head of BM Solutions, said: “At the end of 2017 landlords were less confident than in the previous year, especially in terms of their own letting business – this is to be expected given the volume of change they’ve experienced.

“We have more recently seen the introduction of new portfolio rules in 2017 which will also have started to impact the proportion of landlords looking to expand their portfolio in the next year, while the market adjusts to further change. Having said all of this, profitability still remains strong, with a healthy 86% of landlords making a profit and the average rental yield remaining stable.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Southern buyers gain most from easing mortgage rates and static prices

Buyers in London and the south of England are seeing the greatest improvements in...

Prime London market stalls over summer

The prime London housing market slowed over the summer, with sales volumes and achieved...

Conveyancing Alliance rebrands as CAL

Conveyancing Alliance has unveiled a major rebrand as CAL, bringing its offering under a...

Rugby World Cup legend to host MIMHC Charity Ball 2025

Rugby World Cup winner and sporting icon Will Greenwood MBE has been confirmed as...

PropEco launches audit tool to tackle widespread EPC errors

PropEco has launched an EPC Audit tool designed to identify and correct errors in...

Latest publication

Other news

Southern buyers gain most from easing mortgage rates and static prices

Buyers in London and the south of England are seeing the greatest improvements in...

Prime London market stalls over summer

The prime London housing market slowed over the summer, with sales volumes and achieved...

Conveyancing Alliance rebrands as CAL

Conveyancing Alliance has unveiled a major rebrand as CAL, bringing its offering under a...