Three-quarters of the way through 2019, research from Paragon shows that the state of the country’s Private Rented Sector (PRS) shows little change, as landlords remain cautious but continue to optimise their property portfolios for the challenges that lie ahead.

Whilst many of the landlord sentiment indicators in Paragon’s long-running PRS Trends report are historically low – the result of successive governments imposing fiscal and regulatory changes – there is still a story of resilience.

In its latest survey for Q3 2019, the average portfolio size amongst its experienced panel of 201 landlords has grown to 13.2 properties. With this increase, so too a rise in portfolio value, now at £1.82 million, a second successive record high.

The proportion of landlords saying tenant demand is growing or booming is also the highest it’s been in almost a year (since Q4 2018), reversing a substantial drop in Q1 2019 (21%) and returning to the same level it’s roughly maintained since Q2 2017 (average 30%).

This is consistent with the latest information from RICS which notes that a combination of high tenant demand and low supply is driving rents up across most regions. This higher demand for rented property, however, is not matched by any widespread ambition for expansion, with only 8% of landlords planning to buy in the next quarter and 22% planning to sell.

Looking in more detail, large-scale landlords continue to be far more active, with 10% expecting to buy compared with 1% of small-scale landlords, providing further evidence of a widening polarisation between the strategies of these two groups. As large portfolio landlords continue to make targeted, strategic investments, smaller non-portfolio landlords are more likely to maintain or divest.

Landlord optimism remains historically low at 11%, down from 13% in the previous quarter and 41% in Q1 2014. This extends what is now a long-term downward trend since shortly before the government announced its plans to change the way landlords are taxed, increased stamp duty on second homes, and held the EU Referendum.

As a result, and with more unpredictability ahead, average gearing of investment portfolios increased on the previous quarter but stays historically low at 33% loan-to-value (LTV), as do average mortgage payments as a proportion of rent, unchanged at 25%. This is the result of landlords seeking to strengthen their financial position amid on-going turbulence in the PRS.