Tax changes causing landlords’ confidence to fall

The most recent quarterly index from BM Solutions and BDRC Continental indicates that landlord confidence has slipped across all key indicators

Data from the report, carried out with the BDRC Continental Landlord Panel, uncovered that landlords’ confidence in their own business and wider sector has fallen, due to a raft of recent tax changes.

Profitability

Despite the dip in confidence levels, many buy-to-let investors have seen their profitability remain high. 86% of landlords asked said that they still make a profit from their letting business.

31% said that they make a full-time living from their portfolio, while 55% use the income to supplement their earnings from their day job.

Encouragingly, the number of landlords looking to expand their portfolio has increased, from 13% in Q1 to 15% in Q2.

However, almost 20% of landlords are looking to cut the number of properties in their investment portfolio during the next 12 months. This can be attributed somewhat to tenant demand falling further in the last three months, with 19% of investors reporting a decline.

Gloomier

Head of BM Solutions, Phil Rickards, noted: ‘Landlords are feeling somewhat gloomier in the second quarter and we know some are finding it difficult to adjust to the recent tax changes, which is why those with portfolios of over 11 are most likely to be looking to decrease the number of properties they own in the next year.’[1]

‘This quarter the report has also highlighted declining tenant demand and a fall in intentions to raise rents. However, even against this backdrop, along with profitability remaining high, rental yields have edged up from the first quarter to 6%,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/landlord-confidence-falls-as-tax-burden-increases