Buy-to-let landlord confidence remains subdued

Confidence among buy-to-let investors remains low following recent and forthcoming changes to tax for buy-to-let landlords in the UK, according to research from Paragon Mortgages.

A survey of more than 1,000 private rented sector landlords carried out by BDRC Continental on behalf of Paragon Mortgages found that confidence in the market has improved in recent months, but generally remains sluggish following increased stamp duty and reduced levels of income tax relief for landlords due to be introduced in April 2017.

The study revealed that 41% rated their prospects as being either ‘good’ or ‘very good’, down from 65% during the corresponding period last year, although the signs are that the falling levels of confidence may have stabilised, as the figure is marginally higher than the 39% recorded in Q4 2015.

A higher number of landlords also said that they plan to add to their property portfolios in Q1, with almost a fifth indicating that they intend to buy property in the coming year, up from 17% in Q4 2015, while 16% stated they intend to sell a property, down from 19% in the previous quarter.

A rise in tenant demand is the primary reason more landlords wish to remain active in the market, and while negativity persists around market expectations over the short-term, rental property as an asset class is still viewed positively by many landlords, with 38% of landlords surveyed insisting that the private rented sector remains better than other investment options.

“The main driver of this recovery remains, as ever, tenant demand, which has risen in Q1 2016 along with yields. Landlords are clearly taking the view that buy-to-let remains an attractive long-term, demand driven investment, which continues to outperform other asset classes,” said John Heron, director of mortgages at Paragon. 

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