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PRS Trends Q2 2021


This Private Rented Sector (PRS) Trends report covers the second quarter of 2021,  a dynamic period for landlords that culminated in the beginning of the end of the Stamp Duty holiday on 30 June. As the threshold dropped from £500,000 to £250,000, mortgage lenders worked hard to get purchases over the line in time for buyers to benefit from the maximum tax savings.

Picking up where the Q1 edition left off, we are again able to highlight PRS positivity. Landlords have told us that tenant demand has been strong for some time now and is still perceived to be increasing. Both rental yields and overall profitability are stable too.

Fewer landlords have reported negative experiences and there are some fantastic headline findings, such as incidences of voids hitting a four-year low, the average total of outstanding rent owed to landlords being at its lowest since 2017 and the average number of tenants in arrears at its lowest since we started tracking this metric back in 2011.

Along with the lifting of Covid-19 restrictions and the gradual return of so many of the things we once took for granted, these factors no doubt contribute to the majority of landlord optimism indicators now being at their highest level for a number of years, with the highest proportion of landlords feeling upbeat about the UK’s financial market since Q1 2017, and capital gains for the properties in their portfolios since the end of 2015.

Richard Rowntree
Managing Director – Mortgages

Tenant demand 

The proportion of landlords reporting increasing tenant demand has hit 39% - a five year high.

After climbing by 8 percentage points since the previous quarter, this is a continuation of the trend for rising tenant demand from the low of 14% recorded in Q2 2021.

A fall of 2 percentage points was seen in the proportion of landlords reporting a fall in tenant demand compared to Q1 2021. In addition, the proportion of landlords who are unsure about current levels of tenant demand also saw a small decline, decreasing by 3 percentage points.

Looking at how recent tenant demand has been reported in different parts of England and Wales, the data shows that, with the exception of central London, all regions have seen a year-on-year increase in landlords reporting a ‘significant increase’.

Yorkshire and The Humber has seen the biggest rises after 65% of landlords reported increased tenant demand. This was closely followed by Wales and the South West where a net increase in tenant demand over the past three months was reported by 64% and 63% of landlords respectively.

This demand is also having a positive effect on voids, with just over one in four landlords having a property empty in the last three months, a four-year low.

Yield generation 

After the three-year high of 6% reported in Q1 2021, average rental yields have dropped by 2 percentage points this quarter to 5.8%.

The highest yields of 6.6% are reported by landlords operating in Yorkshire & Humber, which has made great strides since Q1 2021, increasing by 0.9 percentage points. The second-best performing region was the East Midlands, where landlords stated that they were able to achieve yields of 6.2%. While a small decrease of 0.1 percentage points on last quarter, this highlights a continuation of consistent strong performance throughout the past year.

As we’ve seen in the past, yield generation tends to increase in line with portfolio size. This quarter, single property landlords were able to achieve average yields of 5.4%, which increased to 6.7% amongst landlords with 20 or more properties.

Again, in line with what we’ve seen previously, Houses in Multiple Occupation (HMOs) are the property type that offers the highest yields, this quarter generating 6.8%. At this point a year ago, bungalows sat in second place behind HMOs, but Q2 2021 sees this property type now provide the lowest yield generation potential of 5.5%.

Rent arrears 

In Q2 2021 an average of 1.3 tenants had outstanding rent payments, the lowest number since Q1 2011 when research agency BVA BDRC started tracking the metric. This follows a decline from 1.6 tenants since the previous quarter, with the numbers of tenants in arrears falling consistently after climbing to 2.1 in Q2 2020, as the Covid-19 pandemic impacted incomes. 

In addition, the average amount of outstanding rent has reached a five-year low. After falling from £2,376 in Q1 2021 to £1,781 in Q2, a reduction of £595, the average amount of rental payments owed to landlords is the lowest since the end of 2017 when it sat at £1,584.  


The overall profitability metric is calculated by subtracting the proportion of landlords who make a loss from the proportion who make a profit.

With 83% of landlords making a profit from their lettings activity in Q2 2021, we see that profitability has decreased slightly by two percentage points on the previous quarter.

Landlords continue to report strong profitability levels despite this small decline. Overall, three in 10 make a full time living from their portfolios, a figure that doubles to over six in 10 for landlords with portfolios made up of 20 or more properties.

Not only is the incidence of profitability higher amongst large scale landlords, the size of the profit increases in line with the number of properties managed.

Only 4% record a loss which we see is relatively stable when we look at profitability over a longer term.

Landlord business expectations

We gauge landlord confidence by asking how they would rate five different aspects of letting and the broader economy – capital gain, rental yields, UK financial market, UK private rented sector and own lettings business.  Compared to this time last year, landlord confidence is up across all of these key business indicators.

The key metric of ‘Net optimism’ for landlord confidence – calculated by combining those who rated their expectations of their own letting business as either ‘Very good’ or ‘Good’ and subtracting those that rated it as ‘Poor’ and ‘Very poor’ - remains strong despite dropping slightly from the three-year high recorded of +30 in Q1 2021, to +26. 

Portfolio intentions 

Perhaps reflecting the shortages of stock availability being reported recently, Q2 2021 sales activity has edged up slightly higher than purchase activity with an average of 8% of landlords surveyed saying that they have sold property within the past three months and 6% indicating that they have bought.  

Last quarter, the proportion of landlords who said they plan to expand their portfolios (19%) was higher than that who intended to reduce (17%) for the first time in four years.

This investment trend has now reverted, with the proportion of landlords intending to buy in the next 12 months falling from the four-year high of 19% recorded in Q1, to 14% this quarter, while those who think that they will sell has returned to Q4 2020 levels, increasing to 20%.  

Those that intend to expand their portfolios plan to acquire an average of 1.9 properties each and landlords who plan to reduce expect to sell an average of 1.9 properties.  

Terraced properties remain the most attractive purchase target but have been overtaken by flats as the most popular to sell.  

Property purchase strategies

Looking at how landlords intend to finance their next purchase, the majority (63%) indicate that they will use a buy-to-let mortgage. This represents a small increase of two percentage points since Q1, while a larger shift of an additional eight percentage points can be seen amongst those who will seek to release equity from existing properties. Conversely, the proportion of buyers looking to purchase outright using a non-invested lump sum or using previously invested funds has declined by three and four percentage points respectively. 

The proportion of landlords who anticipate purchasing their next buy-to-let property within a Limited Company structure has increased by four percentage points to 51% since Q1 2021. This rises to 67% amongst landlords operating portfolios of 11 or more properties.

Compared to Q1 2021, there has been a fall in the appetite for purchasing either as an individual or in the name of a spouse, both dropping by four percentage points.  


The size of a typical portfolio reduced by 0.4 properties since last quarter to 6.9 in Q2 2021.  

With each of these properties typically valued at £182,609, portfolios generate around £652 per property each calendar month, or £7,826 annually. 

Consistent with previous PRS Trends reports, landlords with buy-to-let borrowing have larger portfolios, made up of an average of 8.0 properties, compared to those who have financed by other means, who have an average of 5.3 properties. 

The Q2 2021 PRS Trends report draws on insight gained through in-depth interviews with just over 750 landlords. These conversations were undertaken by research agency BVA BDRC, and in partnership with the National Residential Landlords Association (NRLA), between June and July 2021.

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