NLA member research: a thought-provoking year for landlords
Based on 738 online interviews with NLA members in June, the research found that the proportion of landlords who believed that there was ‘no change’ in tenant demand was now at its lowest level of 32 percent. Twenty-two percent of members said it had increased, while 21 percent said it had decreased, and a further 23 percent were unsure. The result is a substantially mixed picture.
The main reason why landlords thought tenant demand was decreasing was placed wholly on the shoulders of Brexit. Economic uncertainty and more rental properties on the market were given as secondary and tertiary reasons for the fall in tenant demand.
When looking at tenant demand by region, the picture showed a reversal of a decades-long trend of dominant growth in London and the South East of England. In contrast, the Midlands, Wales and the South West were all showing strong growth.
For the first time since we began tracking profitability in 2007, we recorded three successive declines in profitability. That said, net profitability remains high overall (81 percent).
Rental yields down
Average yields fell from 5.8 percent to 5.5 percent in the second quarter of this year. This is another first – it’s the lowest rate we’ve recorded since 2010. On a brighter note, landlords managing HMOs earn the highest average yield (6.3 percent) and student landlords also gained the strongest yields.
Landlord confidence down
Optimism among landlords was also on the decline in the second-quarter study, with the outlook for business now at a historic low. We found that each of the five confidence indices are now at their lowest levels in seven years. Landlord confidence in their own lettings business, historically the strongest indicator, has been hardest hit since this time last year, and is now at a historically low position (29 percent optimistic).
It is difficult in these unfamiliar times to be the bearer of negative news, but we are ever hopeful that the tide will turn. The new Government under Boris Johnson has given no indication that it will pick up and run with the policy proposals set out under Theresa May’s Government, such as the abolition of Section 21. That said, Brexit uncertainty continues to cause confusion. Until that is resolved, it is difficult to know when these mists will clear.
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