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Latest data: Tenant demand high and fewer landlords aiming to divest

23 Feb 2024

When appraising our Landlord Panel research in its entirely, one common element which springs out is a renewed sense of calm across the buy-to-let market and some strong foundations on which to build over the course of 2024.


One important element within this is the solidity shown by sustained levels of landlord confidence. According to the BVA-BDRC Q4 2023 research, landlord confidence has improved across all metrics year-on-year, with many feeling confident about the opportunity for capital gains on their properties, the private rental sector (PRS) as a whole, and the UK financial market.

Quarter-on-quarter results show landlord confidence in their own lettings business remains stable, with rental yields the only metric of the five to dip quarter-on-quarter. The fall in rental yield confidence stems from a perception that tenant demand has decreased for the first time since Q2 2022. 

Another key factor in establishing these rising confidence levels is tenant demand, which also remains in a good place. 63% of landlords now report increased tenant demand in the last three months, down by 8% on the previous quarter; although this was suggested to be primarily driven by a higher proportion of landlords reporting they are ‘unsure’; only a minority at 4% reported decreasing demand.

Regionally, landlords in the North West outlined the strongest increases in tenant demand, followed by Yorkshire and the Humber; landlords in West Midlands reported a notable decrease, down by 26% quarter-on-quarter. 

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Landlords are also showing less inclination to divest some, or all, of their properties. Planned divestment remained lower than the figures reported in H1 last year, while those planning to acquire property has increased by 3%. Landlords with the largest properties continue to be most likely to acquire at 19%.

After a very challenging 2023, it’s hardly a surprise to see landlords remaining somewhat cautious about what the future might hold, particularly in terms of ongoing finance. Clearly, tenant demand has been running at very high levels and, coupled with the supply situation and the need for landlords to cover larger mortgage costs, rents have risen significantly in many areas over the past 12 months.

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Those fundamentals aren’t really changing, but they have clearly steadied somewhat. While mortgage terms are ending for a large number of landlord borrowers throughout 2024 and beyond, the rate environment has shifted which should hopefully allow them to meet affordability criteria, secure the levels of loans they need and keep any increases in mortgage payments down. Although this certainly remains an area for lenders and intermediaries to closely monitor in the coming weeks and months.

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