Improving yields throughout 2023 may stop more landlords quitting – and, in addition, rental reforms are unlikely to be as bad as some suggest.

That’s the view of Leaders Romans Group, one of the largest lettings agency groups. 

It says growth in the lettings industry is likely to be one of the results of the mortgage turbulence of 2022.

“Aspiring investors are well placed to look to purchase properties being marketed at reasonable value” says the firm, noting that the current lack of quality rental stock means improved yields due to increasing rental prices and reducing sales prices. 

“We therefore, expect to see a reduction in the amount of landlords selling, which will help supply. The buying landscape will still force many potential tenants into the already-congested rental space, with supply unlikely to catch up to the demand quickly enough” it notes.

It adds that while the harsh taxation regime against landlords will remain in place this year, improving yields versus reducing sale prices are expected to cut the number of landlords selling and help supply. 

“In the meantime, landlords should also be seeking value-add approaches to maximise their investment performance such as setting up as a limited company with technical, fund and share structure management services via a dedicated provider.”

However the agency plays down the impact of additional government changes on their way.

It says: “The Rental Reform Bill aims to level the playing field for tenants and whilst the new laws will need to be understood, the changes around Section 21 and possession rights are not nearly as punitive for landlords as some of the headlines suggest. 

“In addition, future-proofing investments by prioritising energy efficiency not only makes those properties attractive during today’s cost of living crisis but ensures they are well placed for changes to EPCs in the years ahead.”