Confidence up as landlords develop coping strategies

by: Heather Greig-Smith
  • 21/02/2017
  • 0
Confidence up as landlords develop coping strategies
Landlord confidence is rising as tenant demand increases and investors develop strategies to cope with changes in legislation.

That is according to Paragon Mortgages’ latest Private Rented Sector (PRS) Trends report.

It found marked differences in landlord sentiment from this time last year when government plans to reduce tax relief on buy-to-let mortgage interest, compounded by an increase in Stamp Duty on new purchases, provoked uncertainty. At the time, the proportion of those expecting to sell property reached its highest ever level (25%).

However, Paragon said as the tax relief changes edge nearer, landlords have begun to develop strategies to manage the impact, and the figure is now reversing, down to 17%.

The most commonly reported actions have been to increase the rent they charge to cover some or all of the increased cost (24%), to maintain their current properties but not buy any more (21%) and to sell some of their properties and not buy any more (16%).

The proportion of landlords willing to purchase buy-to-let property in Q1 2017 has grown to 13%, up from a record low of 9% 12 months ago.

Of the 204 landlords interviewed, 94% described tenant demand as stable or growing, with fewer than one in 30 suggesting a decline. Tenant demand continues to impact average void periods, which remain unchanged at 2.7 weeks, with 48% of respondents reporting that their properties stand empty for less than two weeks. Average yields also remained remarkably stable at 6.1%.

John Heron, managing director at Paragon Mortgages, said: “With no material improvement in the supply of new housing against a background of strong population growth and household formation, it is no surprise that landlords are continuing to experience strong rental demand. It is promising therefore that there has been some improvement in landlord buying intentions albeit from a low base.”

However, he said caution is required. “The tax changes haven’t started to be implemented yet and therefore the real impact has not even started to be felt. In the last quarter, 33% of landlords have seen their total rental income increase – boosted by the 24% that have actively increased rent – which is not necessarily good news for everybody.”

While 71% of landlords said they believed they understood the implications of the income tax relief change, 29% either did not fully understand the changes or felt they needed more information.

Among landlords expecting to purchase, these are most likely to buy terraced houses (62%), flats/maisonettes (31%) or semi-detached houses (23%).

There are 0 Comment(s)

You may also be interested in


Keep up-to-date with all the breaking bridging and short-term lending news and analysis, from regulatory changes to product innovation and inside market knowledge. Take a look at our broker and lender case studies showing short-term finance in practice.


Find all the news, opinion and analysis for property finance brokers specialising in commercial and semi-commercial mortgages, alternative and development finance for commercial investments in residential projects.

Second charge

Stay up-to-date with the latest news, analysis and opinion on the secured loan market as it evolves into a mainstream finance option following European regulation on 21 March 2016.

Complex buy-to-let

Whether it’s a complicated asset or a complex customer, you’ll find out all the breaking buy-to-let news in this section. From limited companies to portfolio landlords, student lets to a House in Multiple Occupation, we’ve got all bases covered with our up-to-the-minute news, analysis and opinion.

Mortgage Solutions

Find all the breaking news, analysis and industry comment on Specialist Lending Solutions' sister site, Mortgage Solutions

Read previous post:
flexible working
MPs attack government for ‘ignoring gender pay gap recommendations’

A group of MPs has criticised the government for failing to take on board a list of recommendations to help...