Landlord confidence in investment property is waning, despite yields remaining consistent, according to new figures from the National Landlords Association (NLA).
The proportion of landlords optimistic about the chance of them being able to rely on a steady yield from their investment property has fallen by 15 per cent over the last two years. In Q2 of 2015, 64 per cent of landlords claimed to be able to rely on a consistent yield, a figure which has fallen to 49 per cent in the second quarter of 2017.
Landlord confidence appears to have declined following the announcement from Chancellor George Osborne in July 2015 that mortgage interest relief would be removed for UK landlords. However, in contrast to investor opinion, rental yields have remained steady over the past few years.
Landlords in the East Midlands currently claim the highest rental yields on their properties at 6.9 per cent. Outer London landlords do not fare so well, and generate the lowest yields at a mere 5 per cent. Landlords in the North West, West Midlands and Scotland can also expect a steady income, with yields of 6.4 per cent, 6.3 per cent and 6.3 per cent respectively.
Investment property prices in the UK are starting to improve following a prolonged slowdown. The average price of a UK home has risen in July by 0.3 per cent, in contrast to declines recorded in March, April and May.
Chief Executive Officer at the NLA, Richard Lambert 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.’