Confidence among London’s landlords ‘bouncing back’ ‒ OSB

Data analysis was carried out by the insights team at OSB Group, which boasts lenders like Precise Mortgages, Kent Reliance and InterBay among its brands.

The report noted that landlords operating in London have consistently ranked among the most pessimistic for some time, with the pandemic only exacerbating issues. Not only have three quarters of landlords seen their business negatively impacted by Covid-19, investors have also seen capital gains slow as a result of slower annual price growth in the capital compared with other regions.

While landlords in the capital remain among the most pessimistic, OSB argued that they can no longer be considered an outlier as a result of a “significant increase” in the number of respondents suggesting prospects in the city are good or very good in the lender’s recent landlord panel surveys, in comparison to other UK regions.

It’s also worth noting that overall confidence in the private rented sector across the country has trended upwards since the low point of the first quarter of 2020, as the pandemic took hold.

Rising demand

As lockdown restrictions have eased, so too have prospects for the capital’s property investors. The study noted that tenant demand in London has tracked below the UK average in recent years, but central London has seen a sharp recovery, with the number of landlords reporting increasing demand growing from one in 10 in the second quarter of 2021 to more than half by the final quarter.

This growing demand is also boosting rental returns. OSB noted that the third quarter of 2021 saw confidence in rental yields in both central and outer London increase to all-time highs in the series, which dates back to late 2016. Indeed, central London moved from the lowest-ranked region in the second quarter to exceed the national average in the third quarter, the first time this has happened in more than two years.

Roger Morris (pictured), group lending engagement director at OSB Group, noted that the large amount of property in the capital which is rented on a short-term basis meant that it was hit particularly hard by the pandemic.

He added: “This more recent data shows that the economy is showing signs of positive change, with the buy-to-let market slowly returning as more properties go back on the short-term rental market in London as demand grows, reducing the volume of long term let properties available.  Renters that had relocated outside of London are now returning, possibly missing the city’s vitality but also in response to employers requesting staff to return back to the office.”