Private property landlord sector in UK sees growing demand

Published 28th Apr 2011

Nearly half of UK landlords report that tenant demand is increasing as the property sector continues to prosper, according to a new report.

Some 49% saw demand increase in the first quarter of 2011, the latest quarterly snapshot from buy to let mortgage specialist Paragon shows. Just 5% saw demand fall.

The proportion of landlords reporting growing tenant demand was up from 40% during the final quarter of 2010. The proportion of landlords reporting increasing levels of tenant demand has now risen for seven consecutive quarters, the Private Rented Sector Trends Report also shows.

Looking forward, landlords expect tenant demand to continue strengthening with over half, some 52%, expecting demand to increase over the next 12 months, and only 6% forecasting a decline.

‘Landlords are experiencing high levels of tenant demand, and this is expected to rise due to a number of factors, including social housing reforms, lifestyle choices, low numbers of first time buyers and wider demographic changes,’ said Nigel Terrington, Paragon Group chief executive.

‘We are seeing evidence that strong tenant demand is feeding through to higher rents. A lack of available mortgage finance is restricting the sector's ability to expand and needs to be addressed to create a healthy and vibrant buy to let market in the UK,’ he added.

Paragon's report also shows, however, that buy to let mortgage finance availability remains low with 64% of landlords saying that availability was limited.

However, landlord confidence has strengthened, with 23% of landlords saying they were more optimistic regarding the performance of their property portfolio.

Yields increased to 6.2%, the highest level since the fourth quarter of 2009 and the average number of properties in a portfolio stood at 13, with an average weighted portfolio value of £1.51 million. And the average gearing, the level of borrowing as a proportion of the property's value, stood at 41%, while the average void period fell for the third quarter in a row to 2.8 weeks a year.

‘Landlords have experienced a positive start to the year. Tenant demand continues to strengthen, yields are rising and confidence is high. Prospects for landlords in the private rented sector are high and they can expect this to continue throughout, and beyond, 2011,’ Terrington added.

Source: ' Property Wire '

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