Business positivity has collapsed – Pegasus Insight
Landlords’ confidence in their business prospects and the sector as a whole has fallen dramatically over the last fifteen years, although those making a profit has increased marginally and those experiencing rental arrears has nearly halved over the same period, according to new research. Meanwhile, the average age of a landlord has increased.
The data from Pegasus Insight shows that today less than a quarter (23%) of landlords are confident about the prospects for their letting business, compared with nearly two-thirds (63%) in 2011.
Even more dramatic is the fall in positivity. Only a quarter (25%) feel positive about being a landlord today, down from more than three-quarters (77%) in 2011. Just 2% believe landlords are respected, compared with 7% previously.
However, 85% of landlords report making a profit, up from 82% 15 years ago. The share of those experiencing rental arrears has fallen from 50% to 28% and average rental yields have remained relatively steady at 6.4%, compared with 6.7% in 2011.
Changing demographics
The average landlord is now 63 years old, compared with 56 in 2011 and the average portfolio size has shrunk from 11.8 properties to 8, while the average number of buy-to-let mortgages has declined from 8.8 to 5.9. The proportion of landlords owning their entire portfolios outright has risen substantially, up from 25% to 43%.
Nearly nine in ten (89%) believe that it’s now harder being a landlord, up from 66% in 2011. Meanwhile, the proportion saying it allows them to earn a living has fallen from 62% to 48%.
Limited company ownership has also become more widespread. Almost a quarter of landlords (24%) hold at least one property in a limited company, up from 17% in Q3 2020. Among landlords with incorporated properties, the average number held in a company has risen from 7.6 to 12.7, representing 75% of their portfolios compared with 57% six years ago.
Bethan Cooke, director of Pegasus Insight, said: “The gap between performance and confidence becomes more understandable when you consider the cumulative effect of government policy. Successive Conservative and Labour governments have left landlords feeling that their contribution is undervalued and wondering where the next additional cost or obligation will come from.
“George Osborne’s announcement in 2015 restricting mortgage interest tax relief marked a turning point. Since then, repeated changes to taxation and regulation have reinforced the feeling that the pressure only moves in one direction, with last week’s Budget adding to those concerns.”
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