Landlords lose confidence in rental profits

Landlords are losing confidence in rental profits following the raft of new regulations that have hit the sector in the past two years, new research shows. According to the National Landlords Association, the proportion of landlords who are optimistic about their ability to rely on a steady rental yield has fallen 64% to 49% since […]

Landlords are losing confidence in rental profits following the raft of new regulations that have hit the sector in the past two years, new research shows.

According to the National Landlords Association, the proportion of landlords who are optimistic about their ability to rely on a steady rental yield has fallen 64% to 49% since July 2015.

The drop-off coincides with the period since the announcement from the then Chancellor George Osborne in July 2015 that mortgage interest relief would be removed for landlords.

However, the sentiment contrasts with actual rental yields achieved across the UK, which have remained fairly stable. Over the past few years, the average yield has fluctuated around the 6%mark.

Regionally, landlords in the East Midlands currently generate the highest rental yields at 6.9%, while the lowest yields are in outer London at 5%.

Richard Lambert, chief executive at the NLA, said: “Average rental yields have remained fairly stable over the past few years, yet there is a steady increase in landlords losing confidence in their ability to make a profit from letting property.

“This perception probably exists because many will now be feeling the impact on their businesses of greater taxation and the costs of complying with regulation, which are eating away at their profits and making it harder to provide homes.

“Like any business, the increasing value of the capital assets on your balance sheet will be of little help if you are treading the fine line between profit and loss, especially if you can’t keep up your mortgage payments in the short term.”

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