Tenant demand hits all-time low as gross rental income falls – TMW

The Gross Rental Income analysis based on a survey by BVA BDRC showed that the average income landlords earn per year dropped by £1,000 to £60,000 coinciding with the decline in demand.

However, although tenant demand and overall gross income dropped, the average income per property rose from £7,992 in Q1 to £8,571 during the period, as landlords reduced their portfolio sizes.

This was also despite fewer landlords reporting they had increased rents over the last year; 21 per cent said this was the case compared to 27 per cent in the first quarter.

The accompanying Tenant Demand Report for Q2, recorded a net score of –11 as the number of landlords citing a slight or significant decline in interest from tenants outstripped those reporting a slight or significant increase.

This is the lowest index score for tenant demand since 2012 and a further drop from the score of –8 reported in Q1.

Rental changes

The proportion of landlords intending to raise their rents over the next six months also dropped as this stood at 13 per cent, down from 15 per cent six months ago. 

However, the majority of landlords said they would not make any changes to this as 61 per cent said the rent they charge would remain the same for the next six months. 

Increases in rent overall appear to have fallen as only eight per cent of landlords said rent had gone up in the areas they owned properties in. This was compared to the 20 per cent who said the same in Q1.

Landlord and property characteristics 

Homes in multiple occupancy (HMOs) provided landlords with the highest yields at 6.9 per cent during the second quarter.

This was followed by bungalows at six per cent then semi-detached houses at 5.9 per cent. Multi-unit blocks (MUBs) provided rental yields of 5.8 per cent while individual flats provided 5.7 per cent. 

When it came to employment status, self-employed landlords generated the highest gross rental income at an average of £105,000 a year.

Landlords who were self-employed in other professions saw an average income of £54,000 and the full-time employed received an average rental income of £48,000. 

Those who work part-time received the lowest average rental incomes at £37,000 a year. 

Borrowing landlords also continued to generate the most profit, the report showed.

Landlords with buy-to-let mortgages earned more than those who owned their portfolio outright, bringing in £75,000 compared to £40,000.