Landlord confidence weakened in the last quarter of 2016, with the number of landlords wanting to buy properties dropping to record lows, according to BM Solutions.
The quarterly BM Solutions survey found that 16 per cent of landlords wanted to expand their portfolio in Q4 2016, compared to 23 per cent in Q3 2016 and 17 per cent in Q4 2015.
The lender says the figure is the lowest since it started the survey.
The UK private rental sector recorded the biggest decline in sentiment in Q4, down 12 per cent to just 25 per cent who report feeling ‘good’ or ‘very good’ about its prospects.
Tenant demand has also softened during quarter four, with 14 per cent of landlords reporting a decline – the highest level for over five years.
However, this perceived softening in tenant demand is mainly driven by central and outer London, where the proportion of landlords reporting falling tenant demand now outnumbers those who say it is increasing.
BM Solutions head Phil Rickards says: “Continued economic uncertainty, together with budgetary announcements that may impact on landlords’ profitability have resulted in a general weakening of confidence in the buy-to-let market in the last quarter of 2016.
“As a result, the proportion of landlords looking to expand their portfolio has fallen to an all-time low.
“However, despite this dip in confidence, profitability still remains strong with rental yields stable. Just over half of landlords are also still reporting a trend in increasing rents in the areas they let.”
Around 14 per cent of landlords claim that tenant demand has shrunk – the highest recorded level.
Regionally, tenant demand is strongest in the East Midlands and South West, with 43 per cent and 40 per cent of landlords respectively reporting a net increase in the last three months.
Demand continues to cool most significantly in central London, where 43 per cent report a decrease.
The research is based on a landlord panel of 652.