Landlords remain optimistic around PRS investment

Negativity surrounding investment in the private rental sector appears overstated, according to the results of LRG's latest landlord sentiment survey.

Related topics:  Landlords,  PRS,  investment
Property | Reporter
1st November 2023
To Let 925
"LRG's resounding message to landlords is to remain committed on the basis that property investment is a reliable and lucrative long-term option"
- Allison Thompson - LRG

Leaders Romans Group has surveyed its landlord clients representing 380 properties, nationwide to understand current sentiment towards property investment.

75% of landlords surveyed identify 'A shortage of rental properties in my area' as a prime opportunity, marking a substantial increase from 29% in February. Similarly, 62% recognise 'Increased rental yields' as a real prospect, a rise from 44% in the previous survey.

This is backed up by recent market analysis from the Housing Insight Report which shows the number of new prospective tenants registered increased from 2022 figures. August 2023 had an average of 197 prospective tenants registering compared to 149 in July 2022.

Figures in August 2023 were up almost 32% year on year which indicates robust demand for rental properties, enabling landlords to capitalise on higher rental yields.

Furthermore, landlords are optimistic about the continued steady rise in house prices: 40% anticipate 'House price increases from 2024 onwards' - a notable increase from 17% in the Q1 survey.

This strong outlook is reinforced by the broader market trends that indicate a slowdown in housebuilding, contributing to reduced supply and heightened demand and thereby bolstering the potential for higher rental income.

While acknowledging the challenges posed by various factors - including the Renters (Reform) Bill and mortgage rates - LRG which represents over 42,000 landlords remains steadfast in its belief that several essential components for a positive market remain intact. The organisation anticipates that interest rates will decrease in the lead-up to the 2024 general election and has doubts about the progression of the Renters Reform Bill.

Allison Thompson, National Lettings Managing Director, Leaders Romans Group said: “Demand for rental properties has seen a 32% increase since last year, with rental prices continuing to rise. This shows the return on investment for landlords remains positive.

"Those landlords we have recently surveyed remain optimistic about the opportunities available in the coming year. LRG's resounding message to landlords is to remain committed on the basis that property investment is a reliable and lucrative long-term option.

“Furthermore, due to high levels of demand for rental properties and a slow-down in property sales, we’re increasingly providing lettings advice to homeowners who need to move but are struggling to sell or don’t want to reduce their house price. Across the country, across different property types and locations, many people in this position are taking advantage of unparalleled demand in the lettings sector.”

Landlords appear to share the positive outlook: LRG's research indicates that the majority of landlords are committed to their property portfolios. 68% intend to maintain their existing holdings, while 6% plan to expand their investments.

Moreover, the confidence in property as a retirement investment vehicle is evident, with 61% of respondents favouring 'property' as a superior option for retirement, compared to 39% who opted for 'pension.'

So while challenges exist, both experts and private landlords themselves share the view that the positives far outweigh the negatives for the foreseeable future.

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