Landlord confidence started to edge up in Q3 from historic low levels, according to the latest BM Solutions index.
Landlord’s confidence in their own businesses saw the biggest improvement, up 5 per cent to 41 per cent from an all-time low position in Q2.
This was followed by prospects for UK’s financial markets, up 4 per cent in Q3 compared to Q2.
Tenant demand softened again during Q3, with only 22 per cent of landlords reporting an increase.
This is the lowest recorded in the last five years.
Landlords in East Midlands report the strongest net increase in tenant demand (40 per cent) followed by Yorkshire and the Humber (39 per cent).
London and the South East are the only regions where more landlords say tenant demand is declining than increasing.
The average rental yield in Q3 remains relatively stable at 5.8 per cent.
Landlords operating in the East Midlands have the highest yields, at 6.7 per cent.
This is followed by the North West (6.4 per cent) and North East (6.1 per cent). Those in central London achieve the lowest yield (5.1 per cent).
A record proportion of landlords (20 per cent) plan to reduce the number of properties in their portfolio in the next year.
Most of this projected activity will be among landlords with 11 or more properties.
BM Solutions head Phil Rickards says: “The latest report shows that landlords are starting to feel more optimistic following a period of declining confidence during the past 12 months.
“Key measures, especially for their own business have improved from the last quarter, with profitability remaining high. More than eight in 10 (84 per cent) of landlords are making a profit from their lettings business.”