Landlords optimistic about rental yields and the PRS

Landlords in the UK have seen a strong rebound in their confidence levels in the third quarter of 2023, according to a survey.

The findings from Paragon Bank, which involved nearly 800 landlords, found that all aspects of landlord confidence improved compared to the second quarter, driven by more stable market and economic conditions.

The most significant improvement was in the outlook for rental yields, with the survey revealing that 49% of landlords rated their expectations as either ‘good’ or ‘very good’ in Q3.

‘Great to see a lift in optimism amongst landlords’

Richard Rowntree, Paragon’s director of mortgages, said: “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.

“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.”

He added: “I imagine that recent policy announcements will have had a positive influence on how landlords see the prospects for the sector and their businesses.”

Proportion of landlords who are confident

The survey also highlights an increase in the proportion of 11 percentage points of landlords who are confident in the prospects of their own lettings business.

Landlord confidence in the private rented sector (PRS) also increased by eight percentage points.

Expectations for capital gains, which reflect the potential profit from selling a property, climbed by six percentage points.

Optimism for the UK financial market

The survey also highlighted how optimism for the UK financial market was more muted, experiencing a more modest increase of two percentage points.

Mr Rowntree said: “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 Renters (Reform) Bill that will likely be welcomed by landlords so could add to the more positive outlook.”

Share This Article