Confidence among landlords has dipped for the first time in almost two years, driven by uncertainties including housing benefits and tax changes announced in the emergency budget, according to the latest NLA Landlords’ Optimism Index in conjunction with BDRC Continental.

The Index dropped from 51 to 47 points between Q1 and Q2 2010. However, four in ten landlords expect the increase in Capital Gains Tax to have a detrimental impact on their investment, while others predict that the CGT increase, and any future interest rate rises, will lead to a decline in investment. The results also indicate that landlords are concerned about the planned cuts to the Local Housing Allowance which could lead to more rent arrears.

Chris Norris, policy manager, NLA, said: “Despite gains over the past two years, landlord optimism has dropped from the first quarter of 2010 as landlords consider tax changes announced in the emergency budget and they hear talk of a double-dip recession. Furthermore planned cuts to Local Housing Allowance are causing concern to many landlords as they could leave tenants struggling to pay their rent.

“Despite these negative factors, the NLA / BDRC Continental survey shows that more than half of landlords are still positive about prospects in the next three months and are predicting strong rental demand whilst the current economic uncertainty continues.”