Your Business and Industry
Rising landlord confidence and rising rents
As an intermediary-only lender, we fully understand the importance of the advice process, and this has become increasingly apparent in a buy-to-let marketplace which got that little bit tougher for landlords and a little lighter when it comes to confidence levels of the back of well-documented events over the later part of Q3 and early Q4 2022.
Thankfully, we are now benefitting from increased economic stability and some renewed levels of confidence. This was evident in the Q1 2023 BVA BDRC Landlord Panel report – brought to you in conjunction with Foundation Home Loans – which outlined that landlord confidence was up slightly when compared to Q4 2022.
Confidence was reported to have increased across 3 key metrics: rental yields (+5%) UK financial market (+3%) and landlord’s own letting business (+2%). Confidence in both capital gains and the wider private rental sector remained broadly stable.
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Confidence in landlord’s ‘Own Lettings Business’ also saw a slight improvement on Q4 data. Larger portfolios (11+ properties) reported the highest levels of optimism at 30%. Regionally, those in the South West are more confident about their lettings business at 33%.
The proportion of landlords reporting rising rents increased in Q1 23. Landlords will also continue to increase rents further over the next 6 months. On average, rents will increase by 8.2%, although the smallest landlords (with a single property) will again seek the highest increases at 11.4% (up by 2.7% vs. Q4). Increased running costs continue to be the main cause of planned rental increases.
On a regional basis, landlords with rental properties in Wales are most likely to report seeing rents increasing at 90%, (slide 34) while landlords operating in Central London and the South East are most likely to have increased rents in the last 12 months. (slide 35)
The combination of rising confidence and the inevitable nature of rising rents is an interesting one for landlords, lenders, intermediaries and tenants. Many other factors are influencing the BTL market which is slowly picking up pace as greater levels of competition emerge and opportunities continue to present themselves for those landlords who are in this for the long haul.
FOR INTERMEDIARIES ONLY
