Q3 2018 was kind to landlords

Q3 2018 was kind to landlords

The dust has settled following the Autumn Budget and we can now look at the numbers behind the sensationalist headlines. Despite many claiming that landlords were losing out once again it is clear that, in reality, times have rarely been better for people who rent out property.

The main figure which should stand out for both existing landlords and those looking to enter the sector is the one showing that a record number of property investors made a profit in Q3 2018 according to research from BM Solutions.

88% of landlords made a profit on their rental activities over the quarter – an increase of 2% from Q2 2018. Active landlords are cited as saying that they have experienced no additional financial difficulties in Q3 2018 in stark contrast to many negative news reports.

In addition these landlords are upbeat about the future of the UK rental sector, their lettings businesses and the prospect for increasing rental yields in the future, showing that the sentiment on the ground is somewhat different to what we are often told.

Whilst it is true that the average rental yield in the UK has dropped slightly to 5.9% – following an increase to the highest point in four years in Q2 2018 – the overall number does not tell the whole story. As often seems to happen, the statistics for London have been included in the overall average and drag the number down, somewhat obscuring the happier statistics elsewhere; for instance, the average rental yield in the North West is as high as 6.7%.

Another area for positivity is overall tenant demand which is at its highest level for more than a year. There are regional variations here too, but the story is positive across the majority of the country with the number of landlords reporting a drop in tenant demand down 8% in a year.

Perhaps then it is no surprise that a third of landlords are reporting rent rises over the last 12 months and a further 27% planning to increase rent over the next six months thanks to the favourable conditions. Furthermore, 9% more landlords are reporting rent rises in the areas around their properties than a year previously.

Phil Rickards, head of BM Solutions, said: ‘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 and their own letting business compared to Q3 last year.

Clearly this is a good time to be a landlord and we are expecting to see additions to portfolios and new investors entering the market over the next year and beyond as the reality of the situation becomes clearer and people can more easily see that negative news reports are exaggerating the situation.

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