UK Landlords Exhibit Increased Confidence in Q3, Survey Reveals

UK landlords have shown a strong rebound in confidence during the third quarter of the year, surpassing levels seen in the same period last year, according to a survey conducted for Paragon Bank. The research, carried out by BVA BDRC, indicates improvements across all areas of landlord confidence, buoyed by more stable market and economic conditions.

A significant increase of 16 percentage points was observed in landlords’ outlook for rental yields, with 49% expressing positive expectations for this aspect of their lettings business in Q3. This marks a notable rise from Q2 2023. Furthermore, confidence in the prospects of their own lettings business climbed by 11 percentage points, the second-largest increase in the survey.

Landlord confidence in the private rented sector (PRS) rose by eight percentage points compared to the previous quarter, while expectations for capital gains increased by six percentage points. However, optimism regarding the UK financial market saw a modest two percentage point increase.

The survey, which included nearly 800 landlords, suggests that overall confidence in the lettings sector is stronger than in the same period of 2022, especially regarding rental yields and landlords’ own business prospects.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, commented on the findings: “It’s great to see a lift in optimism amongst landlords, reflecting some of the stability that we’ve seen return to the market and economy more broadly. Landlords play a vital role in the UK’s housing provision, so it is important that they feel confident in the investment environment, particularly at a time when demand continues to outstrip supply.”

He also acknowledged the potential impact of government policy on landlord perceptions: “Although there is still work to be done on all sides as we work to improve the PRS for both tenants and landlords, we’re encouraged by signs that the value of private investment is being recognised by Government. I imagine that recent policy announcements will have had a positive influence on how landlords see the prospects for the sector and their businesses.”

Rowntree added, “It’s also worth noting that this research was undertaken before it was announced that the removal of Section 21 would be delayed until court reforms and a new ground for possession for student landlords was created. These are both significant changes to the Renter’s Reform Bill that will likely be welcomed by landlords so could add to the more positive outlook.”

This surge in landlord confidence reflects a more positive outlook for the UK’s property rental market, amidst ongoing efforts to balance the needs of tenants and landlords.