UK landlords are more optimistic than previously thought about buy-to-let as the market gears up to absorb economic and regulatory challenges, according to a new survey.

A survey of 300 UK landlords has found that a third of landlords plan to expand their portfolios this year, while 43 per cent expect yields to improve.

“It is encouraging to see landlords expressing such confidence in the UK buy-to-let market… This reflects the resilience of the sector and the continued demand for rental properties despite much speculation around landlords selling up,” Paresh Raja, CEO of Market Financial Solutions, said.

There had been fears of a potential buy-to-let exodus after the announcement of new renter-friendly legislation, the Renter’s Rights Bill.

Benham and Reeves director Marc von Grundherr called the bill a “potential rental market doomsday”, and a director at Inventory Base, Siân Hemming-Metcalfe, said that it risked “destabilising” the market.

Notably, the bill will ban Section 21 no-fault evictions, apply the “decent homes standard” to private rental homes and give tenants the right to challenge rent increases.

Octane Capital CEO Jonathan Samuels said that there has been a “consistent campaign” from the government to “deter landlords from the sector by way of legislative changes”.

However, Samuels added that landlords still see the buy-to-let market as a “worthy endeavour”.

“It’s fair to say that the landlord exodus that has been so widely talked about in recent years has been largely over exaggerated,” he said.

Economics trumps fear of red tape

While the survey from Market Financial Solutions found landlords optimistic, it said affordability, economic instability and regulation still remained “concerns”.

Economic issues trumped regulatory changes, with just over 40 per cent of landlords concerned about tenants’ ability to pay rent and just over a quarter concerned about regulatory challenges.

February delivered another month-on-month rent rise in the UK, with price up by 0.2 per cent, from £1,207 to £1,209 per property on average, according to Goodlord.

Goodlord said the figures were “an early indicator that we’re in for another summer of significant rent increases.”

Founder of Repossession Rescue Network Patricia McGirr said last year that rising rents were a “pressure cooker ready to explode”.

An estimated 235,837 privately rented households fell into rental arrears during the 2023/24 financial year, marking a 3.2 per cent increase on the previous year, according to FCC Paragon. London accounted for a quarter of this figure.

However, falling mortgage rates should reduce the upward pressure on rents. Strive Mortgages director Jamie Elvin suggested that a “lender race to stay competitive” is coming, as falling swap rates drive repricing.

“With reductions of up to 0.25 per cent across residential, buy-to-let and product transfers, first-time buyers, home movers and landlords all stand to benefit.

“As more lenders follow suit, further rate cuts… look likely, keeping brokers and borrowers on high alert for the best deals.”