As a result of recent government interventions in the buy-to-let market, confidence among landlords remains low. But a new survey of 1,000 landlords by market research company BDRC Continental, on behalf of Paragon Mortgages, shows that buyers are slowly returning to the market.
When questioned about expected business over the next three months, 41% of landlords had an outlook that was either ‘good’ or ‘very good.’ This is a reduction of almost a quarter from Q1 2015 (65%), prior to the government’s meddling in the buy-to-let market. However, it is thought that confidence may be stabilising, as the figure is just 2% lower than that recorded in Q4 2015.
This theory is partially substantiated by buying and selling intentions. In Q4 2015, more landlords were looking to sell property than buy property. But in Q1 2016, this has been flipped, with 19% indicating an intention to purchase property in the coming year (up 2%), while 16% plan to sell a property (down 3%).
What confidence there is in the buy-to-let market is built upon a solid foundation of tenant demand, which 39% of landlords reported as increasing either slightly or significantly – an increase of 5% from the previous quarter. Yields also grew slightly, now averaging 5.7%.
Despite the annoyances thrown their way in recent months, rental property as an asset class is still viewed favourably by landlords. Investing in the PRS is considered a ‘much better’ option than other forms of investment, according to 38% of landlords. A third think it’s a ‘little better,’ while only 10% said it was worse than other investment options.