Buy-to-let landlords operating in the East Midlands are the most positive about the future prospects for their rental business, according to BVA BDRC.

Its latest quarterly research examined the attitudes and experiences of over 850 landlords in England and Wales.

It found half of landlords in the East Midlands said they felt good or very good regarding expectations for rental yields over the next three months, with one in three (31%) reporting optimism about the prospect of capital gains.

This contrasts with landlords in Wales, where 29% felt good about the outlook for rental yields and 14% saw the potential for capital gains.

Landlords in the North East, however, were least likely (8%) to rate the outlook for capital gains positively.

Currently, though, landlords in the East Midlands – together with those in Yorkshire and Humber –achieved the highest reported rental yield at 6.1%, compared with an average for landlords across all regions of 5.6%.

However, only landlords in the East of England, Yorkshire and Humber and London added to their property portfolios in the last three months. Sellers in all other areas either outweighed or were equal to buyers.

“Despite the positive picture in some regions, it’s clear landlords are feeling bruised. All the available data shows that tax changes have driven landlords to pull back from the market and encouraged a sharper focus on yields,” says John Heron, managing director of mortgages at Paragon.

“This has reduced the stock available to rent and we are now seeing inflationary pressures building in many regions. The upshot is that tenants are having a harder time finding a good quality home in the sector and having to pay more for it.”