Figures from BM Solutions show that one in five landlords is seeing a drop in tenant demand, with overall demand dipping to its lowest level in five years.
The lender’s poll of 817 buy-to-let investors at the start of this year showed the proportion of landlords looking to expand their property portfolio in the next year was at an all-time low of just 12 per cent while 16 per cent of landlords polled were making no profit on their letting activity at all.
The survey recorded significantly regional differences in tenant demand.
Landlords in Scotland saw a 37 per cent increase in tenant demand, but those in both outer and central London reported reduced demand – i.e. more landlords were reporting tenant demand declining than increasing.
The average rental yield in the fourth quarter remained relatively stable at 5.9 per cent.
Landlords in the north west generated the greatest rental yield of 6.7 per cent, followed by the south west (6.2 per cent),East Midlands and north east (both 6.1 per cent).
Those in outer London achieved the lowest yield of 5 per cent.
Average rental yields per region
|Yorkshire & the Humber||5.9|
|East of England||5.6|
|South East (excl. London)||5.6|
Source: BDRC Continental
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 have 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 per cent of landlords making a profit and the average rental yield remaining stable.”