Landlord Confidence Index (LCI) No.24: 2024 Q4

Is the glass half-full, or half-empty? Landlord confidence recovered some of the losses experienced in the third quarter. Though confidence gains were recorded in every English region (the first time this had happened since 2023 Qtr3), the LCI recorded its second lowest ever score - the percentage increase in the confidence score this quarter compared to last, is one of the largest since the index began in 2019.

Whilst there was growth in confidence right across England, confidence in Wales has continued to drift downwards. Confidence among landlords with portfolios in Wales has now fallen in four of the last five quarters, although each downward leg of this journey is best described as gradual decline rather than precipitous fall.

Among those landlords planning change, the direction of change for most is to sell and either reduce their portfolio, or else exit the market completely. 

The proportion of landlords planning to sell in the next twelve months has fallen – albeit from record highs. However, the proportion of landlords who have sold property in the last twelve months – over a quarter of all landlords polled – reached a record high. Thus the figure surpassed the previous record high…set in the last quarter!

The key reason for selling remains the Renters Rights Bill, although fewer landlords cited it as an influence this quarter compared to the last (when it was first introduced). The other leading motivations prompting portfolio adjustment (ie selling given the incredibly low levels of interest in buying) were (i) overall confidence in the sector as a home for investment and (ii) growing concern about EPC change. Note the fieldwork for this analysis was undertaken before recent government announcements on the topic. 

On rents, the long-term effects of inflation and higher costs are still working their way through the sector.  However, with 61% of landlords having raised rents last year – the lowest proportion since 2023 Qtr1 - there are again signs of cooling off.

There needs to be a caution here however: with future investment requirements and regulatory uncertainty coming down the track, landlords’ “planning to increase rent”(not shown) over the next twelve months are still at high levels (72%). 

Finally, signs the demand sign is cooling continues – the proportion of landlords who are perceiving an increase in demand is continuing to fall: the “net positivity” index is now down to +41. At the same time 72% of landlords reported it took less than four weeks to relet a vacant property. This is down 9 percentage points from the peak at the end of 2022 and the first half of 2023.