Battered and Bruised: but a few buy to let investors remain optimistic

Many buy to let investors are still badly bruised by the government’s wave of fiscal and regulatory assaults on the private rental sector according to specialist lender Paragon. 

In its latest market snapshot the lender says that only landlords in the East of England, Yorkshire and Humber and London added to their property portfolios in the last three months. 

In all other areas, sellers either outweighed or were equal to buyers.

“It’s clear landlords are feeling bruised. All the available data shows that tax changes have driven landlords to pull back from the market and encouraged a sharper focus on yields” explains John Heron, Paragon’s managing director of mortgages. 

“This has reduced the stock available to rent and we are now seeing inflationary pressures building in many regions. The upshot is that tenants are having a harder time finding a good quality home in the sector and having to pay more for it.”

However, the company’s market analysis does contain some glimmers of hope.

For example, landlords operating in the East Midlands are the most optimistic about the future prospects for their rental business.

Half of landlords in that region say they feel good or very good regarding expectations for rental yields over the next three months, with one in three reporting optimism about the prospect for capital gains.

This contrasts with landlords in Wales, where fewer than one in three feel good about the outlook for rental yields and fewer than one in seven see the potential for capital gains. 

Landlords in the North East were least likely - at just eight per cent - to rate the outlook for capital gains positively.

Landlords in the East Midlands, together with those in Yorkshire and Humber, also achieved the highest reported rental yield at 6.1 per cent, compared with an average for landlords operating across all regions of 5.6 per cent.