Landlords in the UK are losing confidence in their ability to rely on steady rental yields and the proportion who are optimistic going forward has fallen, the latest monthly report shows.
The drop-off in confidence coincides with the period since the announcement from the then Chancellor George Osborne in July 2015 that mortgage interest relief would be removed for landlords, according to the report from the National Association of Landlords (NLA).
The figures show that the proportion of landlords who are optimistic about their ability to rely on a steady rental yield has fallen 15% in the last two years, down from 64% in the second quarter of 2015 to 49% in the second quarter of 2017.
However, the sentiment contrasts with actual rental yields achieved across the UK, which have remained fairly stable. Over the past few years, the average yield has fluctuated around the 6% mark.
Regionally, landlords in the East Midlands currently generate the highest rental yields at 6.9%. By contrast, landlords in outer London generate the lowest yields at 5%. The figures are published at a time when property prices in many areas of the UK are stalling.
‘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,’ said Richard Lambert, chief executive officer at the NLA.
‘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,’ he explained.
‘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,’ he added.
