Landlord confidence has declined sharply over the past 15 years despite maintaining strong financial performance, according to research by Pegasus Insight.
The analysis found that just 23% of landlords are confident about their business prospects, down from 63% in 2011. However, profitability remains robust, with 85% reporting a profit compared with 82% in 2011. Rental arrears have also fallen from 50% to 28%, while average yields have remained relatively steady at 6.4%, compared with 6.7% in 2011.
Demographic shift
The research reveals significant changes in the landlord demographic. The average landlord is now 63 years old, up from 56 in 2011, while average portfolio size has declined from 11.8 properties to eight. The average number of buy-to-let mortgages has fallen from 8.8 to 5.9, and the proportion of landlords owning their entire portfolios outright has risen from 25% to 43%.
These shifts carry implications for lenders’ product design and risk appetite, particularly as the sector continues to professionalise. The trend mirrors broader changes affecting small business landlords across the property sector.
Only 25% of landlords feel positive about their role, down from 77% in 2011, while just 2% believe landlords are respected, compared with 7% previously. Almost nine in ten, at 89%, say being a landlord has become harder in recent years, up from 66% in 2011.
The proportion saying letting property allows them to earn a living has fallen from 62% to 48%, highlighting the distinction between reporting a profit and feeling that the sector provides a worthwhile livelihood.
Limited company growth
Limited company ownership has increased, with 24% of landlords holding at least one property in a limited company, up from 17% in the third quarter of 2020. Among landlords with incorporated properties, the average number held in a company has risen from 7.6 to 12.7, representing 75% of their portfolios compared with 57% six years ago.
Bethan Cooke, Director of Pegasus Insight, said: “The gap between performance and confidence becomes more understandable when you consider the cumulative effect of government policy. Successive Conservative and Labour governments have left landlords feeling that their contribution is undervalued and wondering where the next additional cost or obligation will come from.”
She added that George Osborne’s 2015 announcement restricting mortgage interest tax relief marked a turning point, with repeated changes to taxation and regulation since then reinforcing concerns.
Mark Long, Managing Director of Pegasus Insight, said: “Landlords have demonstrated considerable resilience, adapting their businesses through years of change. Their fears about the future can obscure the commercial reasons for remaining in the market, particularly the continuing demand for the homes they provide.”
He noted that the changing demographic raises questions for lenders regarding landlords’ longer-term plans, whether they are borrowing to invest, refinancing established portfolios or preparing to reduce their involvement in the sector.
Market implications
Long added that professionalisation is expected to continue, with experienced portfolio landlords playing an increasingly important role. “Lenders will need to consider how their product design, underwriting and risk appetite accommodate both an ageing landlord population and the more complex requirements of professional businesses,” he said.
The findings suggest that while landlords maintain profitable operations, policy uncertainty and regulatory pressure continue to erode confidence in the sector’s long-term prospects. With housing supply already constrained, the research highlights the risk that profitable landlords may choose to exit the market despite financial viability.
