Confidence in Property Investment Recovers from Historic Low

Confidence in property investment is on the rise in the third quarter of 2017, following historic lows.

According to the latest index from BM Solutions, landlords are beginning to feel more optimistic about prospects in the sector. Landlords’ confidence in their businesses saw the strongest improvement, up a solid 5 per cent to 41 per cent. This is up from an all-time low noted in Q2.

Prospects for the UK’s financial market also saw significant improvement. They were up 4 per cent in Q3 in comparison to the second quarter of 2017.  However, Tenant demand was down during the third quarter, with just 22 per cent of landlords noting an increase. This is the lowest figure recorded in the last five years.

Landlords in the East Midlands reported the strongest net rise in tenant demand, at 40 per cent. They were followed by investors in the Yorkshire and the Humber at 39 per cent.

In contrast, London and the South East are the only two UK regions within which landlords say tenant demand is declining as opposed to increasing.

In terms of yields. The UK Q3 average remains at 5.8 per cent. Landlords operating in the East Midlands again top the chart at 6.7 per cent. Landlords in the North West can obtain yields of 6.4 per cent, and those in the North East can achieve yields of 6.1 per cent. Again, London landlords lose out, with yields in central London at just 5.1 per cent.

Whilst property investor confidence is on the rise, a record number of landlords, at 20 per cent, aim to reduce the number of properties in their portfolio in the next year. The majority of this predicted activity is expected to be amongst landlords with 11 or more properties.

BM Solutions head Phil Rickards said: ‘The latest report shows that landlords are starting to feel more optimistic following a period of declining confidence during the past 12 months. Key measures, especially for their own business have improved from the last quarter, with profitability remaining high. More than eight in 10 (84 per cent) of landlords are making a profit from their lettings business.’

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