UK property landlords most confident since 2007, new research shows

Some 57% rate overall prospects for the lettings business over the next three months as good or very good but this renewed optimism is fragile, according to the Landlords Optimism Index published by the National Landlords Association.
 
Increased optimism levels can also be at least partially explained by stronger profitability, with portfolio landlords back on track to generate sufficient revenue to save income each month, the research also shows.
 
There has also been a slight improvement on how landlords perceive the UK financial markets with 28% saying that they expect markets to improve further over the next three months which is a 5% improvement on this time last year.
   
‘Landlords have faced considerable challenges recently. Everything from longer void periods to an increase in rental arrears have taken their toll on landlords’ optimism. However, it is good to see we may well have turned a corner,’ said Chris Norris, NLA policy manager.
 
‘Alongside a more positive outlook for their own lettings businesses, landlords are beginning to think more actively about possible acquisitions in the next quarter. This should be further encouraged by an increase in the level of available buy to let mortgage finance on offer. With rent arrears and void periods both stabilising, 2010 could prove to be a real catalyst for landlords who are looking to expand their portfolios,’ he added.
 
But he also points out that expected increases in Capital Gains Tax could hit confidence in coming months.
 
However, finance for landlords is improving, according to separate research by Moneyfacts. More mortgages are now available for the buy to let sector which reached rock bottom in September 2009 when there were 95% less deals than at the peak of the market in August 2007.
   
The number of BTL mortgages available has grown 70% since September 2009, increasing from 179 to 304, and encouragingly a number of these deals are at higher LTV levels as lenders are reappearing back in the sector and average rates are continuing to fall.
 
‘This is encouraging news for investors, especially those who were locked out of the market as the maximum available LTV’s fell. Competition has returned to the market, as lenders make cuts to their new borrowing rates,’ said spokesman Darren Cook.
 
But he too warns about the impact of CGT rises. ‘Government sources predict that CGT on non-business assets, including buy to let properties, could rise from 18% to a figure that could be as high as 40%. In a separate blow the annual exemption limit for CGT, currently £10,100, may come down to as low as £2,500. This will bring hundreds of thousands more people into the tax net,’ he explained.
 
‘One possible consequence could be an increase in the preferred investor properties on to the market as people scramble to take any current gains. The changes could spark a downward price spiral, but could create opportunities for both homebuyers and potential landlords,’ he added.