Buy to let investors are enjoying their best yields and fastest rising rents for years even though government efforts to slow the market and Brexit have taken a toll.
Yields are outpacing house prices – hitting a two year high of 4.5% outside London.
Meanwhile, rents have risen by 1.3% to an average £896 a month, which is the fastest growth rate since 2017.
But landlord confidence has slumped and many are pulling back from extending their portfolios, says Buy to Let Britain, a report from specialist lender Kent Reliance.
The lender calculates buy to let has expanded by 0.2% to 5.4 million homes, while the value of these properties has increased by £6 billion in the past year – the lowest increase in a decade.
“Recent headlines may have been dominated by reports of landlords leaving or planning to leave, the private rented sector. The confidence of investors has taken a hit, but the number of homes in the sector isn’t dwindling. Growth, however, has been subdued in the last three years, following government intervention and uncertainty over the economic impact of Brexit, says the report.
The study also notes that the buy to let market has changed.
Remortgaging accounts for three out of four new loans as landlords seek to reduce costs and fix interest rates.
The research also notes 72% of loan applications now come from limited companies rather than individuals.
“Typical portfolio size is likely to increase as the sector continues to professionalise: those looking to sell down expect to dispose of an average of 1.9 properties, while those looking to purchase expect to buy an average of 2.3 properties,” said the report.
“Those looking to reduce their portfolio size in the next 12 months outnumber those looking to expand their holdings by two percentage points (18% vs 16%).”