Despite the introduction of higher Capital Gains Tax (CGT) and the prospective impact of the Renters’ Rights Bill, landlord optimism has risen.

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The recently published Landlord Trends report for Q4 2024 from a research and consultancy services firm indicates that landlord confidence has grown year-on-year.

According to the research, 37% of landlords reported 'good' or 'very good' prospects, an increase from 33% the previous year.

Landlords reporting a ‘large profit’ are unsurprisingly the most optimistic with 71% expressing positive sentiments whilst this drops to 33% for those reporting a ‘small’ profit.

Among landlords who are breaking even or incurring losses only 8% feel positive about their prospects.

Bethan Cooke, a director of research and consultancy firm, said: “Improving landlord confidence is testament to the resilience of the buy to let sector and the strength of the fundamental economics underpinning this market, fundamentals which the Renters’ Rights Bill will only serve to reinforce.

“If this new Bill forces more landlords to exit the market, it will further deepen the supply/demand imbalance which pushed average rents to unprecedented levels last year.”

She added: “What’s more, as the legislative threat builds, so does the pressure for landlords to pre-emptively increase rents to future-proof their businesses.”

Despite an upward trend in optimism there are growing concerns about the potential impact of the Renters’ Rights Bill.

Despite increasing positive sentiments in the sector the concerns over the Renters' Rights Bill persist, the firm reports that around 75% of landlords fear the Bill will negatively affect their lettings business, with 43% highly concerned.

This apprehension extends to the wider private rented sector with 65% predicting a significant negative impact from the Bill.

Although 73% of landlords raised rents last year, over 80% are still renting out at least one property below market rates. These landlords estimate they are subsidizing an average of 4.7 properties, typically at a cost of £144 per property each month.

Despite landlords subsidizing rents, the average rental yield achieved remains near the 10-year high of 6.4% recorded in Q3 2024.

The director of the firm said: “Those landlords charging below-market rates may currently be compromising on revenue in order to retain good tenants but may not feel they have the option of continuing to do so in a more restrictive environment.

“The long-term profitability trend for the buy to let market is stable, and prospects for the sector remain very good.