Further rise in rental demand

More than four out of 10 landlords (44%) said tenant demand increased during the third quarter and just 4% thought it declined. When asked for their views on tenant demand for the next 12 months, almost half of landlords (49%) said they expected tenant demand to continue to increase.

Rental income remained healthy for a third consecutive quarter with 34% of landlords reporting an increase and only 4% saying that it had decreased. Of those landlords who achieved an increase in Q3, 11% said it was between 2% and 4%.

Interestingly, there has been a shift in the types of properties that landlords are looking to purchase. Terraced houses were the most popular choice at 41% followed by flats (35%) and then bungalows – which have surged in popularity from 2.7% in Q2 to 10% in Q3.

Nigel Terrington, Chief Executive of Paragon, said: "Tenant demand has continued to increase for a third quarter, which is perhaps not surprising considering the current squeeze on the UK housing market as a whole.

"More people than ever before are relying on the private rented sector so it is positive to see that landlords are looking to invest in their portfolios and are also diversifying the types of property in which they are investing in order to meet tenant demand."

Paragon’s PRS Trends Report for Q3 covers the period 1 July to 30 September, also shows:

* Yields dropped only very slightly from 6.2% in Q2, to 6.1% in Q3;
* Average portfolio value increased from £1.42million in Q2 to £1.48million in Q3;
* Continued improvement in the perception of availability of buy-to-let finance, with 27% of landlords saying they thought it was at least reasonably available;
* Average void period for Q3 was 2.8 weeks;
* One in 10 landlords are currently using social media channels for business purposes, mainly Twitter and Facebook, to advertise vacant properties for rent.

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