Landlord confidence rebounding with smaller portfolios leading the way – BM Solutions

It appears landlords with smaller portfolios are particularly pleased with their business prospects and profitability, research from the survey on behalf of BM Solutions found.

Of the landlords with between one and four properties, net profitability has risen for the past two consecutive quarters and is now at its highest point for four years, with 85 per cent making a profit, up 11 per cent from Q3 2020.

Encouragingly no landlords expected to lose their lettings business as a result of the pandemic, and only a third expected they would be negatively impacted by the pandemic – down from 56 per cent at the start of 2020 when the coronavirus first arrived.

And small landlord confidence in the UK private rental sector and their own letting business is now higher compared to the same point 12 months ago.

This was echoed in the wider survey encompassing landlords with portfolios of all shapes and sizes, where 35 per cent felt upbeat about prospects for the next three months.

Positive picture

Other key points from the overall Q4 research included one in five landlords intending to sell a buy-to-let property in the next year, down from a quarter in Q3.

And 16 per cent plan to buy a property in the next 12 months – a slight increase on the figure from the previous survey.

Half of the landlords expect to use a limited company for their next property purchases while just over a quarter of BTL borrowers intend to remortgage in the next 12 months.

Landlords were also more confident in the short-term for capital gains and rental yield increases, with these measures up seven per cent and four per cent respectively year-on-year.

Tenant demand reached its highest point for five years with a third of landlords reporting higher demand over the last three months, although those based in London were most likely to face falling demand.

BM Solutions head Phil Rickards said: “This quarter’s findings really show what a difference a year can make as they paint a more positive picture for the buy-to-let (BTL) market, with more landlords reporting a profit and 16 per cent intending to acquire more properties in the next 12 months.

“Undoubtedly the economy still faces wider challenge, but the resilience of the BTL market that we have seen time and time again in the past is showing positive signs of bouncing back.”