Landlords 'remain optimistic about buy-to-let despite current challenges'

UK landlords remain broadly optimistic about their prospects in the buy-to-let (BTL) market, despite the current challenges facing the industry.

This is according to the latest BTL Barometer report from Shawbrook Bank, which has revealed that 65 per cent of BTL investors are currently confident about the performance of their property portfolio in 2018, compared to only 14 per cent who saw this as a cause for concern.

Key drivers of this optimism included strong tenant demand and high yields, with 21 per cent of those surveyed saying they have experienced an increase in tenant demand in the 12 months to 2018. As such, 39 per cent of landlords are planning to invest in another BTL property this year, with the north-west and south-east emerging as the preferred regions.

This confidence in the market is persisting despite growing concerns about the state of the British economy. Economic optimism among landlords has fallen from 47 per cent to 34 per cent in the last year, while levels of concern have risen from 33 per cent to 42 per cent over the same timeframe.

The ongoing uncertainty surrounding Brexit is one potential cause of these worries, while many landlords are also expecting an impact from the Prudential Regulation Authority’s (PRA) recent changes to the way in which BTL mortgage applications are underwritten.

Karen Bennett, managing director of Shawbrook Bank Commercial Property, said the continued confidence in the market reflects the fact that property still offers a strong return on investment for professional landlords with a sound strategy.

However, she added: “While the investment case for BTL remains strong, there are particular challenges ahead for portfolio landlords and the additional impact of the PRA changes.

“Landlords now face much more stringent affordability tests, and it’s therefore more important than ever that landlords are clued up on their obligations as the market continues to get even more complex.”