Rent rise slowdown fails to dent buoyant rental market

Private landlords expect the buy to let boom to continue despite letting agents reporting a slowdown in rent rises.

At least 86% see little change in the market for at least the next 12 months, with only 6% suggesting demand will drop, according to a new survey.

Landlords across the UK reported to Paragon Mortgages that tenant demand was stable or growing.

In general, buy to let and shared house landlords are buoyant about the prospects of private rentals.

Rents hovering around their peak at an average £737 month, says leading letting agent LSL Property Services.

While landlords have told Paragon their rental profits are rising. Yields have increased from 6.2% in the first three months of 2013 to 6.4% at the end of June 2013.

In the same period, shared house (house in multiple occupation or HMO) landlords reported an even higher average yield of 6.6%, while buy to let landlords saw returns rise from 4.7% to 5.2%.

This affluence is persuading many landlords to consider expanding their property portfolios.

Around a fifth expect to buy more rental property. Terraced houses are the favourite choice for investors, followed by flats and maisonettes.

Paragon director John heron said: 'This 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.?

Article courtesy of LandlordZONE
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