Lettings sector optimism on the rise, despite string of obstacles

Optimism amongst investors in the private rental sector is on the rise, despite the various tax and regulation obstacles facing the industry.

That’s the analysis of specialist mortgage lender Paragon, which has conducted its quarterly survey of almost 800 landlords: this has found that confidence rose across four of five measures during the fourth quarter of 2019 compared to the previous three months.

Landlord confidence in the UK financial market leapt, with 24 per cent rating the prospects as good or very good compared to just nine per cent in the third quarter. 

Meanwhile landlord optimism for the broader private rental sector, capital gains and the landlord’s own lettings business also increased over the period.

Although landlords are less optimistic about the prospects for yields – the one area of increasing pessimism - they still believe both rents and property prices will increase as a direct result of the election. 

A quarter of respondents said rents would rise, compared to one per cent who predict a fall, whilst 32 per cent expect property prices to rise against 14 per cent forecasting a decline.

“Although still low compared to historic levels, a more certain political and economic landscape will hopefully provide the platform for confidence to continue to grow” explains Richard Rowntree, Paragon’s new director of mortgages.

“Although tenant demand has remained strong, landlords have had to weather of myriad of regulatory and tax changes over the past five years, so they will be looking for government to allow those changes to fully bed in and for a period of consistency.”

Regionally, landlords in the South West and East Midlands were most bullish about the prospects for their own lettings business over the next three months, whilst landlords from these regions were also most confident about yields in the period.

Additionally, landlords with 11 or more properties tended to be more upbeat on the prospects for rental yield and the financial markets than those with smaller portfolios.