Landlord profitability rose in the third quarter of this year, as buy to let property investors settled down with their portfolios.
The latest quarterly BM Solutions/ BVA BDRC Landlords Panel found that nearly nine out of ten landlords (88 per cent) reported a profit on their buy to let property portfolios in the last quarter, a rise of 2 per cent from quarter two.
Continuing the positive outlook, landlords are feeling slightly more upbeat when it comes to the near-term prospects for rental yields, the UK private rental sector and their own letting business compared to the third quarter of last year.
Average rental yields actually dropped during the third quarter from 6.2 per cent to 5.9 per cent. However, this followed a rise of 0.4 per cent in the second quarter.
The highest rental yields were enjoyed by landlords operating in the North West and Wales at 6.7 per cent and 6.3 per cent respectively. Rental yields are the lowest in Central London at an average of 5.3 per cent and Scotland at 4.7 per cent.
Tenant demand has also increased to the highest level since the second quarter of 2017, with Central London in particular seeing a 9 per cent rise in the proportion reporting increasing demand for rental properties and a 14 per cent fall in the number of landlords who feel that demand has decreased in the last three months.
The number of landlords increasing rents increased slightly to around a third, and the number intending to increase rents in the next six months was also up from 24 per cent to 27 per cent.
Head of BM Solutions, Phil Rickards, commented: ‘Despite many recent challenges to the buy to let market, it’s encouraging that more landlords have made a profit from their buy to let properties this quarter, and that landlords are feeling slightly more upbeat when it comes to the near-term prospects for rental yields, the UK Private Rental Sector (PRS) and their own letting business compared to Q3 last year.
‘For those speculating about the future of buy to let, the figures supporting tenant demand should help to dispel this myth.’
He continued: ‘Considering the much talked about shortage of housing supply, it is vital that we continue to support a healthy Private Rented Sector and with tenant demand scores improving, or remaining stable across all UK regions, it is clear that the PRS still has a very important part to play.’