Despite a number of ongoing concerns such as the state of the Brexit negotiations, tighter BTL regulations and tax changes, landlords are still feeling upbeat about the future though less so than in previous years.
The Key Findings of the Report
At present, around 41% of BTL landlords feel positive about the state of the market and their portfolios. This was down from 44% in the previous quarter, but it does suggest that there is no significant shift in the attitudes of landlords in BTL. It is still a long way from the 67% satisfaction rate reported just three years ago.
- In the first quarter of the 2017-18 financial year, 10% of BTL landlords increased their portfolio
- In the same period, 8% reduced the amount of property within their portfolio
- Projection for the second quarter said that 19% expected to reduce their portfolio while 13% expected to increase
Whether these survey results reflect the reality is a different matter. The tax changes came in during quarter one, but it does seem that owners are coming to terms with and adapting to the changes rather than selling up. No mass exodus is likely in the near future, but many are not happy about the changing landscape.
No Mass Exodus
This data suggests there will be no sudden mass exodus as some initially feared, but it may push those with a small portfolio out of the market entirely, meaning the BTL stock will be concentrated in the hands of a smaller number of large holding companies. The market for tenants continues to grow with 27% of landlords across the sector experiencing a growth in demand for their property in the first quarter. This is still high, but slower than recent years. The same rating was 39% last year.
One reason for the lack of mass exodus is that all major parties addressed the housing issue at the election in June. While no party won an overall majority, there is clearly a desire to do something within the halls of Parliament. But that’s not to say that a lack of a mass exodus means landlords are generally positive about the future. There is reduced satisfaction but most seem to want to stay in the industry to ride out the problems.
Renting to Students
The student rental area of the BTL market is still an attractive proposition. You are almost guaranteed a constant stream of tenants. It’s also a great sector for planning. Contracts might typically last one year, but you will have eager new tenants looking for property for the following year as early as January. If the state of the market is affecting your profitability, it may be time to shift your attention to the student market and Pads for Student’s model of connecting students with prospective new landlords.