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Private landlords: Not out of crisis yet

The research indicates landlords’ optimism continues to recover with more than a half of respondents (57%) considering their business prospects for the next three months as good.

Over the last three quarters prospects for capital gains have also improved most steadily, with 48% rating them positively.

Almost a third of respondents (32%) claim to be making enough profit to save money and this figures reaches 48% of professional landlords, those with 20 properties or more.

Compared to the last quarter, where a ‘wait and see’ approach prevailed, an increased proportion of landlords are expecting to expand their portfolio (23% vs. 19% Q4 09) or to sell some of their properties (15% vs. 13% Q4 09) in the next three months.

Nearly half of professional landlords (45%) expect to buy a property in the next quarter. Consequently 21% of all landlords and 41% of professional landlords are likely to seek further mortgage finance in the next three months.

The impact of the proposed CGT regime changes will be assessed in the next wave of the research in June.

The good news is that securing mortgage funding is slowly becoming less of a struggle for  landlords. The research reveals that the proportion of those who found it difficult to raise funding has decreased gradually from 51% in January 2009 to 44% in Q2 2010.

There have been further signs of an improvement in the mortgage market with low interest rates of 3.6% on average, helping borrowers meet their monthly payments. The proportion that missed a mortgage repayment dropped from 5% to 3% in the last three consecutive quarters. The results also reveal only 3% of respondents (vs 5% in the last quarter) expect to miss a mortgage payment in the next quarter.

The findings suggest that despite the recovery of landlords’ confidence, the rental market remains challenging. The inexorable climb of rental arrears continues with 34% of landlords being affected in the last 12 months, the highest proportion ever recorded in the survey.

BDRC spokesman Mark Long said

“Although there are indicators in this quarter’s research that suggest the private rental market is stabilizing, it is too early to refer to this as a ‘recovery’. Britain’s private landlords still have to cope with uncertain economic conditions and arrears are at the highest level since the research began in 2006. The research also shows that two thirds of landlords don’t intend to change the price of the rent charged to tenants in the next 3 months.”

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