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UK landlords feeling the pinch despite rent increases, research shows

The latest findings from the BDRC Continental quarterly Landlords Panel research reveals the biggest rise in the number of portfolio landlords making a loss since the Landlords Panel began in 2006.

The research shows that in the fourth quarter of 2011, the number of portfolio landlords, that is those with 20 or more properties, who reported making a loss rose from just 1% in the third quarter of 2011, to 8% in the last quarter of the year.

At the same time, while portfolio landlords reaped the highest rental yields at 7%, average rental yields for all landlords fell in the fourth quarter of 2011, down to 5.9% from 6.7% in the previous quarter.
In fact, the last quarter of 2011 saw rental yields for all landlords fall to their lowest level in the year. This is despite almost half, 46%, of landlords having increased rents for tenants in the previous 12 months and one in three , 34%, planning to do so during the first half of 2012.

However, BDRC Continental’s research reveals that landlord sentiment remains upbeat about the prospects for the private rental sector, with 80% saying that they feel positive about being a landlord.

It says this may be because the number of landlords reporting a recent void period in their property fell 5% from 41% in the third quarter of 2011 to 36% in the fourth quarter.

But while half of landlords have experienced arrears, there is only a marginal difference in the number of landlords who are concerned about rental arrears in the next 12 months and those who are not.
‘Unsurprisingly, in a difficult economy a larger portfolio of property brings greater exposure to risk and those landlords are clearly feeling the impact of rising costs and a decline in profitability,’ said Mark Long, director of BDRC Continental.

‘This is the highest level we have seen of landlords with 20 plus properties making a loss, and the biggest increase between one quarter and another. In previous waves of the research the highest figure of loss making for this group was 4% in the third quarter of 2009. Some landlords are clearly feeling the pinch,’ he added.