Paragon has reported that landlord optimism in the prospects for their lettings business, portfolio capital values and the broader financial market increased following the December general election.
The lender’s quarterly survey of nearly 800 landlords (conducted by BVA BDRC) 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% rating the prospects as good or very good compared to just 9% in Q3, whilst landlord optimism for the broader private rental sector, capital gains and the landlord’s own lettings business also increased over the period.
| Business expectations rated as good or very good for the next three months % | ||
| Q3 2019 | Q4 2019 | |
| Own letting business | 28 | 31 |
| UK PRS | 14 | 16 |
| UK financial market | 9 | 24 |
| Capital gains | 21 | 23 |
| Rental yields | 40 | 39 |
Although landlords are less optimistic about the prospects for yields – gross rental income as a proportion of portfolio value – 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 1% who predict a fall, whilst 32% expect property prices to rise, against 14% forecasting a decline.
Richard Rowntree (pictured), Paragon managing director of mortgages, said: “After several quarters of declining optimism amongst landlords, it’s pleasing to see the green shoots of recovery in confidence. 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.
“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.