The latest quarterly sentiment survey conducted by BVA BDRC Landlord Panel for Foundation Home Loans has unveiled a notable upswing in landlord confidence. This shift comes in the wake of recent government decisions to postpone the removal of Section 21, alongside a backtrack on enforcing stricter mandatory Energy Performance Certificate (EPC) levels.
Among the surveyed landlords, 12% cited the government’s U-turn on EPC requirements as a pivotal factor enabling them to remain in the rental market. This stands as a stark contrast to previous quarters, which witnessed a steady increase in landlords contemplating exiting the sector. The most recent report indicates a decline in this sentiment from 37% in Q2 to 28% in Q3.
Notably, 8% of all landlords expressed intentions to expand their property portfolios within the upcoming year. Larger portfolio holders exhibited stronger inclinations toward acquisitions, with 18% of those possessing 20 or more properties planning to augment their portfolios in the coming year.
The survey also highlighted a substantial surge in tenant demand, with 71% of landlords reporting an uptick, marking a 4% increase from the previous quarter and hitting an all-time high. Conversely, only 3% of landlords reported a decrease in tenant demand.
This surge in demand, coupled with an ongoing shortage of private rental stock, resulted in a 5% rise in the proportion of landlords noting increased rents over the last year compared to the previous quarter. Furthermore, rental yield experienced a slight uptick, reaching 5.3% quarter-on-quarter.
Grant Hendry, Director of Sales at Foundation Home Loans, commented on the findings, noting, “There are evidently several factors influencing individual landlords’ perspectives on their portfolios and their outlook for the future. However, the shift towards optimism across various aspects and the quarter-on-quarter rise in confidence are encouraging trends.”
He continued, “Factors such as robust tenant demand and the belief that mortgage rates may have plateaued are contributing to this shift. The government’s decision not to escalate minimum EPC levels, at least for the short term, has provided relief for many landlords and could potentially influence their decision to remain invested in the sector.”
Hendry emphasized the importance of maintaining energy efficiency in rental properties despite the temporary reprieve in regulations. He cautioned against complacency, especially in light of escalating utility costs experienced by households in recent years.
“While it’s premature to conclude whether this marks the beginning of a sustained trend, there’s a noticeable rise in optimism among landlords in the Private Rented Sector (PRS),” Hendry concluded. “If this positive sentiment translates into landlords sustaining housing supply for tenants, it bodes well for the market.”