According to the data analysis — based on a number of historical variables sourced by BVA BDRC — all regions saw a sharp increase in confidence in the second half of last year, with a resurgence in London.

The data highlighted a record number of landlords reporting increased tenant demand in Q3 2021, with the strongest growth seen in the South West, and Yorkshire and Humber.

Central London observed a particularly sharp recovery in tenant demand as well, jumping from just 10% of landlords reporting higher demand in Q2 2021 to 56% in the fourth quarter.

The proportion of UK landlords reporting positive prospects for UK rental yields also trended upwards.

The third quarter of 2021 saw confidence in rental yields in both London regions (central and outer) increase to an all-time high since the beginning of the survey, which spans back to late 2016.

In particular, central London jumped from the lowest-ranked region in Q2 to exceed the national average in Q3 for the first time in over two years.

However, there was a slight drop in confidence in the fourth quarter of the year — particularly pronounced in the capital — coinciding with the introduction of the “Plan B” Covid-19 measures.

Despite this dip, London landlords’ prospects for rental yields at the end of the year remained higher than any other point since 2017.

In line with the tenant demand and rental yield expectations, landlords’ overall confidence in the UK PRS trended upwards.

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While landlords operating in London remain fairly pessimistic overall, there was an increase in the number of respondents saying that prospects are good or very good in the second half of the year, compared to H1 2021.

Commenting on these findings, Roger Morris, group lending engagement director at OSB Group (pictured above), said: “One of the biggest reasons why the BTL market in London was hit hardest during the pandemic is because a large amount of property was rented on a short-term let basis. 

“During the pandemic, the demand for short-term let properties fell sharply and flooded into the long-term rental market, further impacting this fragile rental sector. 

“There was a clear trend also showing that many renters returned back to their family homes where they could see their relatives, save on rent and have increased access to outdoor space.”

“However, this more recent data shows that the economy is showing signs of positive change, with the BTL market slowly returning as more properties go back on the short-term rental market in London and demand grows, reducing the volume of long-term let properties available.  

“Renters that had relocated outside of London are now returning, possibly missing the city’s vitality, but also in response to employers requesting staff to return back to the office.”

Mark Long, director at BVA BDRC, added: “We are delighted to support the OSB Group using our landlord survey data in this way. 

“It’s clear that, notwithstanding some Omicron-related blips in Q4, London based landlords are in a much optimistic state of mind than at the start of the pandemic, and we will continue to track PRS dynamics including regional trends and the health of the London rental market going forward.”