Most landlords are still profitable, according to the latest Landlord Trends survey from the Foundation.
The Foundation said the private rental sector continues to deliver stable returns and is showing early signs of improving landlord confidence, despite ongoing cost and regulatory pressures.
The data, compiled in partnership with Pegasus Insight, shows 84% of homeowners report being profitable.
At the same time, the average rental yield reached 6.5%, while both portfolio values and rental income increased quarter-on-quarter, which the Foundation said reflected continued asset performance.
The lender also said the figures reflect the resilience of professional home owners.
Rental growth is also continuing, albeit at a moderate pace. Almost 61% of landlords expect to increase their rent within the next 12 months, with an average increase of 5.7%.
The Foundation said this reflects a market that is beginning to stabilize after a period of sharp increases, when landlords are balancing cost recovery against the ability to pay tenants.
This research also highlights the ongoing activities in the industry.
Almost four in 10 home loan borrowers (39%) plan to borrow money in the next year, while the average portfolio size has increased to 7.3 properties, reflecting a shift to structured, portfolio-based investing.
Encouragingly, homeowners are also taking a proactive approach to managing the future. 62% of those with low-rated EPC facilities plan to perform operations to meet future needs, suggesting a willingness to invest in building stock and maintain long-term performance.
However, the study also points to a number of ongoing problems for homeowners.
Tenant demand, while still strong overall, has softened compared to previous peaks, with 43% of landlords reporting unemployment, and 30% reporting rent arrears, in the past 12 months.
In addition, although investment intentions have strengthened slightly (from 5% to 8%), a large proportion of landlords continue to consider selling the property – 42% said they plan to sell at least one rental property next year – which the Foundation said may reflect ongoing costs and compliance pressures.
The agency’s director of marketing Grant Hendry said: “The latest data shows the landlord community and the wider independent rental sector continue to prove their resilience. While landlords are clearly facing a number of challenges, from rising costs to regulatory change, the fundamentals remain strong. Profits are stable, profits are stable, and we’re seeing the first signs that confidence is starting to return.
“Most notable is the way landlords are adapting. Portfolio sizes are increasing, more investors are taking a systematic, long-term approach, and there is clear evidence that landlords are planning ahead, whether that’s for retrofit work or preparing for future EPC needs.
At the same time, we should not ignore the pressures that still exist. Soft tenant demand and rising properties indicate that this is a more balanced market than in recent years, and some landlords will continue to reassess their position. However, the overall picture is one of an industry progressing rather than regressing.
