Tenant demand high as landlords invest in more property

Demand for private rented property has remained high during the second quarter of the year, landlords who took part in a Paragon Mortgages survey have revealed.

Almost all of the landlords (93%) that took part in the PRS Trends survey commissioned by the specialist buy-to-let lender, said that tenant demand was either stable or growing.

In the next 12 months landlords are expecting little change in demand for rental property, with 86% believing it will continue to grow or at least remain stable and just 6% saying that it will decline.

Those landlords surveyed also reported an increase in average rental yields, rising to 6.4% from 6.2% in Q1. Professional landlords reported an average yield of 6.6%; however private investor landlords saw a more significant increase from 4.7% to 5.2%.

There was a sharp increase in buying intentions too, with 19% expecting to make property purchases – this has risen from 13% in the first quarter. The most popular property investment choice was terraced houses, followed by flats and maisonettes.

Levels of optimism remained consistent in Q2 with 30% of landlords saying that they are more optimistic about the prospects for their property portfolio – the same level reported in Q1.

John Heron, Director of Mortgages, said: “This long-running survey is designed to improve our understanding of changes in landlord sentiment, motivation and outlook and the second quarter results paint a picture of a strong, confident and growing market.

“Landlords are consistently seeing strong rental demand, and on the back of better availability of buy-to-let mortgages they are planning to buy more property, which should improve the supply of property to tenants, thus easing some of the pressure that has been building.

“Nevertheless, tenant demand continues to remain high, and I suspect this will remain for some time as we wait for more significant improvements in the wider housing market and also for the various Government schemes to take hold and have an impact.”

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