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Landlord confidence at a seven-year low

Landlords’ confidence in the buy-to-let sector is currently at a seven-year low, according to new research.

The latest BVA BDRC1 Landlords Panel surveying more than 700 active landlords in Q2 2019 revealed that landlords’ confidence for their own business showed that just 29% of landlords had positive expectations for their letting business over the next three months, down from 44% at the same time last year.

The panel uses five confidence indices, including capital gains, rental yields, UK financial market, UK private sector and own letting business.

Confidence in capital gains dropped to only 23% in the quarter, from 32% in Q2 2018, and prospects for rental yields fell 10% from 49% in the second quarter of 2018 to 39% in the second quarter 2019, the lowest recorded in more than nine years.

More broadly, confidence in the sector and economy overall declined with 15% optimistic about the PRS, down from 21% a year ago, and 11% optimistic about the financial market, down from 15% in Q2 2019.

Damian Thompson, director of mortgages at Aldermore, commented: “The Private Rented Sector plays a significantly important part of the UK housing market, so it is concerning many landlords have a bleak outlook at the moment.

“We however saw UK buy-to-let lending in 2018 increase 4% on 2017, buoyed by remortgaging, and 2019 lending has been on par with these volumes.

“The rise in activity would suggest the market is not necessarily in decline but in a state of change as landlords diversify their needs away from a growth strategy and the sector adjusts to the gradual shift towards professionalisation.

“Whatever a landlord’s future intentions, the increase in regulatory measures and more complicated mortgage applications means specialist lenders will become more vital in easing the increasingly difficult mortgage process.”

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    I wonder why ???
    Government had better start wondering as well ( not to mention the so-called Tenant support groups that need to shoulder some responsibility for what's about to affect the most vulnerable tenants. )

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    It's the so called ''vulnerable'' tenants that we don't want in our properties at any money, leave them to the council to house, not our problem.

     
  • Paul Barrett

    What about vulnerable LL!?.Any LL who takes on a HB tenant automatically becomes vulnerable.
    Nobody is protecting the LL from the worst effects of HB tenants.
    It is precisely because of this vulnerability that many LL are increasingly refusing to take on such HB tenants.
    Govt and Councils don't seem to appreciate this.
    It could be they know but are choosing for political reasons not to acknowledge this.

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    My mortgages don’t allow for HB but even if they did, all I see is increased risk, I don’t see any benefits at all. I am fortunate that I can pick and choose my tenants. If S21 is abolished or is made harder to get tenants out, then unfortunately, those with only impeccable references including long standing and provable LL references will be chosen.

  • Paul Barrett

    Perhaps in light of the continual bashing that the PRS is receiving LL need to react in such a way so as to protect themselves.
    It would seem as has been intimated that this can only really be achieved by a flight to quality.
    It seems there is no real point in having lots of mortgaged property in the hope of CG on all of them.
    That prospect looks highly doubtful.
    Therefore it would seem to make sense to get rid of any dud properties that cannot achieve quality tenants for who qualify for RGI and downsize portfolios buying far fewer more expensive properties in better areas.
    At least that way LL have a very good chance of achieving yield and removing their exposure to the average wrongun tenant.
    We all know who they are and they are best avoided if at all possible.
    It certainly makes little sense if mortgaged to even consider the wrongun tenant demographic.
    They are just so much hassle for very little if any reward and of course leave the mortgaged LL extremely vulnerable.
    Unmortgaged LL can take all the risks they like with any sort of tenant demographic as they have no mortgage commitments.
    OK when they get a wrongun tenant is reduces their income for awhile.
    That is no big deal compared to a mortgaged LL who could easily face bankruptcy if mortgages aren't paid.
    For that reason alone it must make business sense to move away from the risky tenant demographic.
    I am choosing to do this.
    I will be reducing from 5 to 1 property which won't have much mortgage on it.
    I will buy where I am confident of achieving tenants who can qualify for RGI.
    Or I may choose to buy as a homeowner and take in lodgers.
    Not decided yet but no way will I retain properties where in the past 12 years only one of my tenants qualified for RGI.
    That means that during these years I have been running a massive business risk.
    It has cost me dear when it has gone wrong.
    WITHOUT RGI a LL is pretty much defenceless.
    With it going to be made even more difficult than it already is to get rid of wronguns a flight to quality seems to be the only way to preserve your yield and necessary income.
    If LL do respond this way then that will leave millions of tenants homeless and a big headache for the Govt.
    I see no reason why LL especially mortgaged ones should risk so much when Govt actively operates against the PRS to prevent it managing it's business effectively.
    I say enough is enough.
    Time to dump the wrongun tenants and the dud properties they occupy and invest in better quality properties and tenants.
    Leave the dross for the Govt to sort out.
    LL need to consider only ONE thing and that is PROFITABILITY!!
    Retaining the dross tenants and properties just exposes LL to too much business risk.
    It just ISN'T worth it anymore.

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    Vulnerable/dross tenants is your weakest link in your business. Learnt a long time ago leave these to the houses they deserve in the Gumtree section.

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