There has been a sharp fall in the number of landlords looking to expand their buy-to-let portfolios, according to the latest quarterly index from BM Solutions.
Just 13% of landlords are currently planning to add to their portfolio, which is the smallest proportion since the survey began 11 years ago, the buy-to-let brand of Lloyds Banking Group said.
While recent tax changes is undoubtedly the primary reason why fewer landlords are actively investing further in the private rented sector, the fact that tenant demand continued to slow in Q1 2017, with 17% of landlords reporting a decline, is also having an impact, especially in central and outer London, where the proportion of landlords reporting falling tenant demand now outnumbers those experiencing growth.
But in spite of these negative findings, confidence among landlords has now stabilised, with the proportion of landlords feeling optimistic about the UK’s financial markets having more than doubled over the past 12 months, with confidence regarding capital gains, the UK private rental sector and rental yields remaining stable.
In terms of how landlords feel about their own letting business, the levels have bounced back to the same recorded in Q1 last year.
Landlords in the South East are most optimistic about the prospects of their own letting business, with almost half - 47% - feeling ‘good’ or ‘very good’ about its prospects, while those in Scotland and Wales are the least optimistic, with just 26% feeling positive.
Less than half - 48% - of landlords are seeing rents increase in their area compared to 53% in Q4 last year, while 42% have increased rents across their own portfolio in the last year, down by 3% from Q4, with 32% intending to do so in the next six months, down 5% from Q4.
The findings are based on data from 754 online interviews with National Landlords Association members and associates conducted between 17 March and 30 March 2017.
Phil Rickards, head of BM Solutions, commented: “Despite signs of landlord confidence stabilising this quarter, fewer landlords are feeling optimistic about the prospects for their own businesses.
“This has driven down the number of those looking to expand their portfolio further to a new all-time low despite the average portfolio creeping up slightly.
“The impact of the tax changes has a natural link to landlord confidence, as the market landscape continues to be reshaped by changes in regulation.”