In a recent survey conducted by leading buy-to-let-focused bank Paragon Bank, landlord confidence has experienced a robust rebound in the past few months. The research, carried out by BVA BDRC, a renowned research agency, reveals across-the-board improvements in landlord sentiment driven by more stable market and economic conditions.
One of the most noteworthy surges, a remarkable 16 percentage points since Q2 2023, is observed in the outlook for rental yields. In Q3, 49 per cent of landlords expressed optimism, rating their expectations for this crucial aspect of their lettings business as either good or very good. This resonates with an 11 percentage point increase in the proportion of landlords confident in their own lettings business prospects, marking the second-largest rise.
Landlord confidence in the private rented sector witnessed an eight-percentage-point increase compared to Q2, while expectations for capital gains climbed by six percentage points.
The survey, encompassing the views of almost 800 landlords, sheds light on how optimism for the UK financial market saw a more modest uptick of two percentage points.
These figures underscore a significant upswing in landlord confidence across all facets of letting, barring capital gains, compared to the same period in 2022. This surge concerns rental yields and landlords' confidence in their lettings business.
Richard Rowntree, Managing Director of Mortgages at Paragon Bank, expresses enthusiasm about the resurgence of optimism among landlords, reflecting the newfound stability in the market and the broader economy. Recognising the pivotal role landlords play in the UK's housing landscape, Rowntree emphasises the importance of their confidence in the investment environment, especially amidst ongoing demand that outpaces supply.
While acknowledging the ongoing efforts to enhance the Private Rented Sector (PRS) for tenants and landlords, Rowntree notes that recent policy announcements may have contributed positively to landlords' perception of the sector's prospects. He also points out that the survey was conducted before the announcement of the delay in removing Section 21 and creating a new ground for possession for student landlords—changes likely to be welcomed by landlords, further enhancing the positive outlook in the sector.