According to the BM Solutions/BDRC Landlords’ Panel, confidence in rental yields rose five percentage points to 52%, with confidence in their own lettings business rising three points to 41%.
However, fewer landlords are increasing rents across their own portfolios – down nine percentage points over the last six months to 30%.
More than half (60%) of landlords said they were renting some or all of their properties at below market rent and subsidising rent by an average of £82 per month, rising to £128 in Central London.
Fall in demand
Concerns also remained around the wider financial sector as the remaining three confidence key indicators either fell or remained static.
Confidence in the UK’s financial markets was down 11% year-on-year while confidence for capital gains also fell by 4% over the same period.
The lender found that only three regions – Scotland, the East of England and Outer London – reported an increase in tenant demand from Q4 2017.
Meanwhile, the remaining areas all reported a fall in tenant demand.
North West going strong
Rental yields in Q1 dipped slightly to 5.8% from 5.9% in Q4.
The North West generated the highest rental yield of 6.7%, closely followed by the West Midlands (6.6%) and the East Midlands (6.2%).
Rental yields were lowest in Central and Outer London at 4.8% and 5.2% respectively.
BM Solutions head Phil Rickards said: “After the new underwriting standards came in at the back end of last year, it’s encouraging to see landlords starting 2018 on a more optimistic note particularly around their own business and rental yields.
“While overall confidence in the UK’s financial markets is 11% lower than a year ago and we’re still working through a period of landmark changes in the industry, there are clear signs of good health, as more than eight out of 10 landlords are telling us they are making a good profit from their business,” he added.