Landlords are feeling more confident lately, and it seems to be linked to an uptick in tenant demand, according to recent research by BVA BDRC. In their Q3 2023 Landlord Panel research report, they found that landlords are reacting positively to the perceived increase in tenant demand.
This boost in confidence can also be attributed to the government's decision in September not to push forward with mandatory Energy Performance Certificate (EPC) levels at C and above for all private rental properties. This announcement was welcomed by 12% of landlords who stated that they can now continue operating in the UK rental market.
However, the majority of landlords expressed that this decision would have "no/very little impact" on their rental business. Grant Hendry, the director of sales at Foundation Home Loans, suggested that the overall strong tenant demand, coupled with the belief that mortgage rates might have plateaued and the market is shifting southwards, contributes to this positive outlook.
Hendry highlighted the relief among landlords regarding the government's decision on minimum EPC levels. Still, he emphasized the ongoing importance of ensuring rental properties are as energy-efficient as possible. While it's too early to determine if this is the start of a new trend, more landlords seem optimistic about their future in the private rental sector.
The research also revealed a shift in the intentions of landlords concerning their portfolios. After five consecutive increases from Q2 2022, the number of landlords planning to sell or reduce their portfolio in the next 12 months decreased from 37% in Q2 to 28% in Q3. In contrast, 8% of all landlords expressed plans to increase the size of their portfolio in the next year.
Larger portfolio landlords, especially those with over 20 properties, were more likely to consider portfolio expansion. An additional 18% of these landlords indicated they would be adding to their portfolios in the coming 12 months. Foundation suggested that the decline in landlords planning to divest, combined with the interest of larger portfolio landlords in acquiring more properties, is influenced by various factors, with perceived tenant demand being a significant driver.
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