New data from Paragon Mortgages reveals that there has been a slight improvement in optimism amongst landlords, as they begin to prepare for alterations to mortgage interest tax relief.
In a recent survey, 22% of landlords questioned said they are feeling more optimistic as they come to terms with upcoming changes.
65% of landlords said that their sentiment was unchanged. However, 12% said since the last quarter, they were feeling more pessimistic. More positively, this was down from the 18% sen three months ago.
This slide in negativity coincides with the increased levels of awareness about the implications of the tax relief changes. This policy is set to be phased in from April 2017, with 58% of landlords saying that they have already taken or will undertake measures ahead of this date.
The most common reported actions have been to:
- Increase rents to cover some or all of the increased costs (24%)
- Maintain current properties but not add to their portfolios (21%)
- Sell their existing properties (16%)
Buying intentions, despite being way off their peak, are showing signs of improvement. 13% expect to invest in a buy-to-let property during the next quarter, up from the 11% recorded in Q3.
17% of landlords expect to sell, but again this was down on the 21% seen three months previously.
Unsurprisingly, tenant demand remains high, with 94% of landlords describing the market as either stable or growing. Void period remains unchanged at 2.7 weeks.
John Heron, Managing Director at Paragon Mortgages, observed: ‘We’ve reached a critical time for landlords looking to plan ahead and this is reflected in the Q4 report. It’s clear that landlords’ understanding of the changes has improved and that more landlords are developing a clear strategy to address the impact of the changes.’
‘However, despite increasing optimism, we must remain cautious. The changes have not started to be implemented yet and the full impact will not be felt for many years. Whilst it is predictable that landlords will seek to increase rents in response to higher costs this clearly will not be good news for tenants, particularly those that are already struggling to save for a deposit,’ he added.