Despite the uncertainty of Brexit and increasing tax burdens for landlords, buy-to-let (BTL) investors remain largely optimistic about the prospects for the market in the year ahead.
In its annual ‘BTL barometer’, which explores the current and future sentiment of professional landlords, Shawbrook Bank finds two thirds (65%) of BTL investors are confident about the performance of their property portfolio in 2018. Just 14% say they are concerned.
Good tenant demand and high yields appear to be driving feelings of optimism amongst this cohort of property investors, with one in five (21%) experiencing an increase in tenant demand in the 12 months to 2018.
Although landlords are optimistic, they are also realistic, understanding they will be facing challenges both in the near and longer term. With UK showing lacklustre growth and the overhanging threat from Brexit, confidence in the economy is down, falling from 47% in 2017 to 34% in 2016, while levels of concern have risen from 33% in 2016 to 42% in 2017.
Despite weaker growth prospects for the UK economy, investor appetite remains healthy. Two in five (39%) landlords plan to invest in another BTL property in 2018, with the North West and South East singled out as the preferred regions.
Karen Bennett, Managing Director of Shawbrook Bank Commercial Mortgages, comments:
“There’s a healthy dose of uncertainty around at the moment, but the BTL market is showing its resilience. Property continues to offer an excellent underlying investment vehicle for professional landlords with the right investment strategy. 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.”