Falling confidence among UK landlords over rental yields' stability

by Gary Whittaker

The number of landlords who are feeling confident about the ability of the UK private rented sector to deliver them a steady income stream has fallen, new data has shown. 

Over the past couple of years, landlords owning British rental properties have been hit hard by taxation changes, which have made their operations far more costly. When this is coupled with political uncertainty, it's clear to see why fewer are now confident about the market moving forward. 

The National Landlords Association's (NLA) data shows that in particular, the change in mortgage tax relief has hit buy-to-let owners' confidence hard over the past two years. In 2015, before former chancellor George Osborne made the announcement of new charges, 64 per cent of landlords believed the market had the ability to deliver them a steady stream of income and good yields. 

However, just two years later, in the third quarter of 2017, there has been a real change in attitude, with just 49 per cent saying the same, marking a fall of 15 percentage points in just 24 months. 

The odd thing about the market is that even though confidence is falling, rental yields have remained stable in the same period, according to Richard Lambert, chief executive officer at the NLA.

He said: "Average rental yields have remained fairly stable over the past few years, yet there is a steady increase in landlords losing confidence in their ability to make a profit from letting property."

The reality is, however, that although the market is actually performing well for landlords, many fear the changes that the government has brought in over the last couple of years. It begs the question of whether Westminster should be looking at reversing these to make sure there's no great fall in supply of homes to the private rented sector over the next few years ahead. 

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08-August-17General Lettings News