Binoculars housing market prediction

Optimism prevails for UK landlords as rental yields pick up

Confidence among buy-to-let landlords is at an 18-month high, despite recent gloomy headlines surrounding the sector, and monthly rental yields are growing.

The buy-to-let market continues to change and many are receiving this with negativity, but it seems that landlords themselves remain largely positive about their sector according to new research released in the BM Solutions/BDRC Landlords Panel.

In the second quarter of this year, almost half (44%) of landlords stated that they were feeling good or very good about the near-term prospects for their own lettings business, which is an encouraging 8% increase on the same sentiment exactly a year ago.

Meanwhile, there was a 3% increase in confidence for landlords when asked how they felt about the UK’s financial markets in general, growing from 12% in Q2 2017 to 15% now, and another 3% rise in optimism regarding capital gains in property, from 29% who felt good or very good 12 months ago to 32% now.

Rental yield perception versus reality

However, there was no change for how landlords felt when asked about the future of their rental yields, with 49% reporting a positive outlook this quarter – despite the fact that the average rental yield currently being achieved of 6.2%, according to the figures, is the highest level seen since the fourth quarter of 2014.

Phil Rickards, head of BM Solutions, said: “It is encouraging to see that confidence across all of the key indicators has either increased or stayed the same on a 12 monthly basis and is particularly strong when landlords are considering their own lettings business.
“It’s a promising sign for landlords that rental yields are on the increase and are recovering some of the ground they have lost in recent years.”
In terms of tenant demand, there were regional differences highlighted in the survey, with landlords in the East and West Midlands seeing some of the biggest rises in enquiries from new tenants, while those in the north-east and London had the lowest.

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