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.”