A concerning new report from the National Landlords Association suggests that landlords are losing confidence in their ability to rely on consistent rental yields.
Figures from the investigation show that the proportion of landlords who are optimistic about their ability to rely on rental yields has fallen by 15% in the last two years. Now, only 49% of landlords are confident, as opposed to 64% in 2015.
This fall in confidence marries with the period since then Chancellor George Osborne announced that mortgage interest tax relief for landlords would be phased out.
However, the sentiment expressed by landlords is at odds with actual rental yields achieved across Britain, which have in fact remained relatively stable. In the past few years, the average yield has fluctuated around the 6% mark.
By region, landlords in the East Midlands currently generate the greatest rental yields, at 6.9%. Contrastingly, landlords in outer London see the lowest yields at 5%.
This news comes at a period when property prices in many regions in Britain are stalling, those prices did rise slightly in July.
Richard Lambert, Chief Executive Officer at the National Landlords Association, ‘Average rental yields have remained fairly stable over the past few years, yet there is a steady increase in landlords losing confidence in their ability to make a profit from letting property. This perception probably exists because many will now be feeling the impact on their businesses of greater taxation and the costs of complying with regulation, which are eating away at their profits and making it harder to provide homes.’
‘Like any business, the increasing value of the capital assets on your balance sheet will be of little help if you are treading the fine line between profit and loss, especially if you can’t keep up your mortgage payments in the short term,’ he added.