A new report reveals landlords are growing increasingly confident about the future despite market challenges. Here, we look at how landlords feel about their property investments.
The latest Landlord Trends report from Pegasus Insight reveals “gently increasing optimism” among landlords about their letting businesses. However, unsurprisingly, there’s still a lot of scepticism about the Renters’ Rights Bill’s impact on the market.
Below, we break down all the key data.
Landlord confidence
The Q4 2024 report shows a 4% year-on-year increase in landlords feeling confident (‘good’ or ‘very good) about the future of their letting business, from 33% to 37%.
The confidence amongst landlords, unsurprisingly, differs based on profit:
- Landlords making a ‘large profit’ feel more upbeat (71%) about their prospects
- This falls to 33% for those making a ‘small profit’
- Only 8% of landlords who are breaking even or making a loss feel upbeat
Additionally, landlords feel more positive about 3 significant factors:
- Optimism about business prospects increased from 32% to 37% in the last quarter
- Landlords feel more positive about Capital Gains Tax, rising from 14% to 17% from Q3 to Q4
- There was a slight increase in optimism about rental yields, from 36% to 38%
Landlord sentiment on the Renters’ Rights Bill
While landlords generally have a positive outlook on their property investments, the looming Renters’ Rights Bill poses a significant challenge.
- Roughly 75% of landlords believe the Bill will negatively impact their letting businesses
- 43% are concerned about the Bill significantly impacting their letting business
- A staggering 65% expect the Bill will have a significant negative impact on the Private Rented Sector as a whole.
Average Rental Prices
Despite 73% of landlords reporting an increase in their rents in 2024, over 80% claim they are currently renting out at least one property at below-market rates.
- 62% of landlords plan to increase rents this year
- Those letting at below-market rates are subsidising an average of 4.7 properties
- On average, each property is rented out for £144 less than the market rent, totals £677 across the typical number of properties
Landlords with larger portfolios are likelier to let at least some of their properties at below-market rates.
Despite these subsidies, rental yields remain close to the Q3 2024 10-year high at 6.4%.
Industry Outlook on the Renters’ Rights Bill
Director at Pegasus Insight, Bethan Cooke, commented: “Improving landlord confidence is testament to the resilience of the buy-to-let sector and the strength of the fundamental economics underpinning this market, fundamentals which the Renters’ Rights Bill will only serve to reinforce.
“If this new Bill forces more landlords to exit the market, it will further deepen the supply/demand imbalance which pushed average rents to unprecedented levels last year.
“What’s more, as the legislative threat builds, so does the pressure for landlords to pre-emptively increase rents to future-proof their businesses.
“Those landlords charging below-market rates may currently be compromising on revenue in order to retain good tenants, but may not feel they have the option of continuing to do so in a more restrictive environment.
“The long-term profitability trend for the buy-to-let market is stable, and prospects for the sector remain very good. So, while the Renter’s Rights Bill may make life more difficult for landlords, the unintended consequences are likely to be much harder on tenants themselves.”
Your next steps
No matter how you’re feeling about your property portfolio, it’s important to have a conversation with our brokers to ensure you’re on the best mortgage rate for you.
Not only can we review all your mortgages with a portfolio review, but we can also search all the rates on the market to find you the best product for your next purchase or remortgage.
Get started by submitting an enquiry here, or call us on 0345 345 6788.
