Landlords are feeling much more optimistic than they were a year ago, thanks to a more stable market and economic conditions, according to new research from Paragon Bank.

Confidence in the sector rebounded strongly in the third quarter of the year, with a 16 percentage point uplift in the outlook for rental yields compared with Q2; 49% of landlords now rate their expectations for this aspect of their lettings business as either good or very good.

There was also an 11 percentage point rise in the proportion of landlords who are confident about the prospects of their lettings business. Paragon Bank found all aspects of landlord confidence measured by research agency BVA BDRC had improved compared to the second quarter.

The poll of almost 800 landlords highlights how optimism for the UK financial market was more muted, experiencing a modest increase of two percentage points.

Lets get better

These figures mean that landlords are more confident about all aspects of letting, with the exception of capital gains, compared with the same period in 2022, particularly with respect to rental yields and their own lettings business.

Paragon Bank MD of mortgages, Richard Rowntree (pictured), says although there is still work to be done on all sides to improve the PRS for both tenants and landlords, he’s encouraged by signs that the value of private investment is being recognised by government.

“It’s also worth noting that this research was undertaken before it was announced that the removal of Section 21 would be delayed until court reforms and a new ground for possession for student landlords was created,” he adds.

“These are both significant changes to the Renters Reform Bill that will likely be welcomed by landlords, so could add to the more positive outlook.”