Confidence, profitability and tenant demand

Confidence

Confidence in capital gains and landlord's own business prospects recovered in Q1 with business expectations rising 10% and 5% respectively when compared to Q4 2023. In addition, unleveraged landlords were suggested to be more confident (45%) than borrowers (33%), with those looking to purchase new BTL property in the next year also more upbeat (58%)

Strong tenant demand is helping to drive business confidence, although there are variations in perceived demand across the UK regions, with the South West strongest and Yorks/Humber 'weakest' in comparative terms.

Overall, the proportion of landlords reporting ‘weak’ tenant demand was negligible at just 1%, while only 12% report it to be ‘average’. At the other end of the scale, 40% of respondents cited tenant demand as being very strong with 43% suggesting that it was currently quite strong. To round this up, 4% said they were unsure.

Profitability

Turning our attention to profitability, despite some tough economic and market conditions, 84% of landlords said they remained profitable, with 10% ‘break even’, 4% registering a slight loss and 2% making a large loss.

Overall portfolio size was reported to be a key discriminator in overall profitability, with 13% of single property landlords reporting that they make a ‘large’ profit, vs. 27% of those with 20+ properties. In addition, profitability was suggested to be very similar for consumer and portfolio BTL leveraged landlords. 

It’s encouraging to see such positives signs emerge throughout these three important landlord pillars, and they accurately reflect the cautious optimism on show from landlords across the BTL sector coming into the year. Let’s hope these confidence, tenant demand and profitability levels continue to steadily rise in Q2 and beyond.

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