Landlord confidence declined across all key indicators during the second quarter of the year, the latest quarterly index from BM Solutions and BDRC Continental shows.
The research from the lender, which was carried with the BDRC Continental Landlord Panel, found that confidence among landlords’ in their own business and the wider private rental sector fell to a record-low, amid higher taxes.
However, despite the dip in their confidence levels, many buy-to-let landlords have seen their profitability remain high, with 86% of landlords saying that they still make a profit from their letting business.
Almost a third of private landlords – 31% - make a full time living from their rental portfolio, while over half - 55% - use the income to supplement their day job earnings.
Somewhat encouragingly, the proportion of landlords looking to expand their portfolio has risen from an all-time low of 13% in Q1 to 15% in Q2.
But around 20% of landlords are planning to reduce the number of properties in their portfolio in the next 12 months, owed in part to the fact that tenant demand softened further during Q2, with almost 19% of landlords reporting a decline, especially in central London.
BM Solutions head Phil Rickards said: “Landlords are feeling somewhat gloomier in the second quarter and we know some are finding it difficult to adjust to the recent tax changes, which is why those with portfolios of over 11 are most likely to be looking to decrease the number of properties they own in the next year.
“This quarter the report has also highlighted declining tenant demand and a fall in intentions to raise rents. However, even against this backdrop, along with profitability remaining high, rental yields have edged up from the first quarter to 6%.”