Landlord confidence has slumped over the past 15 years despite rental property remaining a profitable investment, according to research from Pegasus Insight.

Just 23% of landlords said they were confident about the prospects for their letting business, down from 63% in 2011.

The study found profitability has proved resilient, with 85% of landlords reporting a profit compared with 82% in 2011. Rental arrears have also fallen sharply, from 50% to 28%, while average rental yields have remained broadly stable at 6.4%, versus 6.7% 15 years ago.

Despite these financial gains, sentiment has deteriorated markedly. Only 25% of landlords said they feel positive about being a landlord, down from 77% in 2011, while just 2% believe landlords are respected.

Nearly nine in 10 (89%) said being a landlord has become harder, compared with 66% previously, and fewer now see it as a viable source of income, with the proportion saying it provides a living falling from 62% to 48%.

The research also points to an ageing and increasingly debt-free landlord base. The average landlord is now 63, up from 56 in 2011, while the average portfolio has shrunk from 11.8 properties to eight. The average number of buy-to-let mortgages has fallen from 8.8 to 5.9, and 43% of landlords now own their portfolios outright, up from 25%.

Limited company ownership has also grown, with 24% of landlords now holding at least one property through a company, compared with 17% in the third quarter of 2020. Among those with incorporated properties, the average number held in a company has increased from 7.6 to 12.7.

Bethan Cooke, director of Pegasus Insight, said: "The gap between performance and confidence becomes more understandable when you consider the cumulative effect of government policy. Successive Conservative and Labour governments have left landlords feeling that their contribution is undervalued and wondering where the next additional cost or obligation will come from.

“A landlord can run a profitable business and still decide that further investment is no longer worth the uncertainty or effort. That is the risk these findings expose. With housing already in short supply, we need an environment in which responsible landlords feel confident about continuing to provide homes.”

Mark Long, managing director of Pegasus Insight, added: “Landlords have demonstrated considerable resilience, adapting their businesses through years of change. Their fears about the future can obscure the commercial reasons for remaining in the market, particularly the continuing demand for the homes they provide.

“The changing landlord demographic raises important questions for lenders. They need to understand landlords’ longer-term plans, whether they are borrowing to invest, refinancing an established portfolio or preparing to reduce their involvement in the sector. Those different needs have implications for mortgage terms, age criteria and product flexibility.

“Brokers can help landlords put their concerns into perspective, assess their options against their own circumstances and find suitable solutions. Understanding who is borrowing, why they need finance and what they intend to do next will be essential.

“Tracking these shifts over time helps lenders look beyond the prevailing mood and make decisions based on how landlords are actually behaving. Confidence is fragile, but there is a resilient business sector beneath it.”

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