Landlords predict rent rises to tail off

After a recent spurt of rent growth, landlords anticipate that rent rises will taper off over the next twelve months, according to a sentiment survey of more than 1,200 landlords conducted by Your Move and Reeds Rains.

On average UK landlords anticipate that rents will increase by 1.7% in the coming year, a sharp slowdown from the current rate of annual rent growth to a steadier trajectory. According to the latest Buy-to-Let Index from Your Move and Reeds Rains, average residential rents across the UK climbed 3.7% in the year to March 2015, the fastest pace for two years.

The proportion of landlords who will not raise their rents in the next twelve months has increased from 56% in September 2014 to 60% currently. Only a minority of four in ten landlords (40%) intend to increase their rental prices before March 2016.

Over the last six months, 45% of landlords have witnessed an increase in tenant demand – rising from 41% of landlords in September 2014. There has been a boost in lettings activity recently, with new tenancies agreed across England and Wales climbing 6.9% in the month to March 2015. As a result, the proportion of landlords who expect tenant demand to grow further now stands at 63%, up from 56% in January 2014.  Only 3% of landlords currently anticipate demand for rental properties to fall within the next two years.

However, strong demand for homes to let is a considerable factor encouraging further investment into the private rented sector. Three in five landlords (60%) now believe that it is a good time to invest in buy-to-let – a rise from 54% of property investors in September 2014.  The main reason underpinning this increase in confidence is that buy-to-let offers better capital returns compared to other forms of investment, cited by 54% of landlords who think it is a prime time to purchase a rental property.  Meanwhile 40% of property investors perceive now to be an ideal time given that current market conditions offer the opportunity to buy properties at more attractive prices, as price growth has stabilised.

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