Despite recent regulatory changes, landlords’ attitudes towards buy-to-let (BTL) property are stable, a survey found.
Over a fifth – 21.8% – of landlords surveyed described their views of their individual BTL businesses as positive, according to Landbay’s latest landlord survey.
Just under half – 41.4% – of landlords surveyed described themselves as neutral, and 36.8% cited negativity.
However, confidence in the UK economy is significantly worse, with over two-thirds of landlords having a negative outlook, 27.1% being neutral and only 3.8% viewing it with positivity.
BTL lender Landbay said this indicated a market in which landlords are focused on the areas under their control – portfolio performance and financing – but are cautious about the wider economic landscape.
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The survey found that the majority of landlords do not plan to buy or sell in the next 12 months – although it said a “significant portion” still plan to act.
Half – 51.9% – are not intending to buy additional properties, while over a third are planning to add to their portfolios. Landbay said selling intentions are consistent with previous iterations of the survey, which it said indicated continuing portfolio augmentation as opposed to a mass exodus from the space.
Promising yields and rent growth
Landbay noted that many landlords report solid returns in spite of the macroeconomic context, with 27.1% reporting gross yields of 4-6% and 21.8% reporting 6-8% yields. Some 15.8% of those surveyed reported yields of 10% or above.
Over three-quarters of respondents said they were planning rent rises of some kind over the next year. The survey found that the approach to rent setting is involving more flexibility, which Landbay attributed to the recent implementation of the first phase of the Renters’ Rights Act.
Fixed rates still top choice
As with previous surveys, fixed rates are landlords’ product of choice. Some 87.2% cited two-, three- or five-year fixes as their preference for their next mortgage, with five-year fixed rates staying the top choice – cited by almost half of respondents.
Research released last week by Moneyfactscompare.co.uk found that tracker mortgages – alongside variable rates – are seeing a boom, but this did not translate into demand among the landlords surveyed by Landbay. Only 6% said they were likely to choose a tracker for their next mortgage.
The survey identified refinancing as a key theme, with Landbay saying many landlords coming off rates could lock in lower rates than 2-3 years ago. This is despite the recent news of increasing inflation having a knock-on impact on rates.
The lender went on to say that the dearth of deals ending this year was an opportunity for brokers to reach out to their landlord clients and examine their existing borrowing.
Broker advice highly valued among landlords
The survey also found that 83% of landlords used a broker for their last BTL purchase from the start. Meanwhile, 10% said they began the process alone but then enlisted the services of a professional broker to complete the transaction.
Landlords ‘very confident’ about own investments
Rob Stanton, sales and distribution director at Landbay, said: “The key difference compared to the results of our previous survey is that sentiment and confidence appears to have stabilised, even during a somewhat turbulent few months, particularly when it comes to product availability and rates.
“Landlords, for the most part, appear to be very confident about their own property businesses, and the future of their investments, even when their views on the future performance of the wider economy remain far more sceptical.
“What we are therefore seeing is a landlord community [that] is predominantly focused on what they can control. They are making clearer decisions on whether to buy, sell or hold, and are continuing to adapt their strategies to ensure their portfolios remain profitable. It is also clear many landlords continue to achieve strong yields, which underpins their ability to remain active in the market, even in a more challenging environment.
“When it comes to borrowing, the preference for fixed rates remains very strong. Even with more discussion around tracker products, landlords are still prioritising certainty, particularly those looking to plan over the longer term.
“At the same time, a large number of landlords are still on higher-rate mortgages arranged when pricing was less favourable. Even with recent changes, the current environment still presents a clear opportunity for brokers to communicate with those clients and potentially secure improved outcomes.”