8th
Jan 2014
A nationwide property services group predicts a high surge of investment in the private rental sector this year as rising house prices will cause a higher demand from new tenants.
From July to December last year 2,195 landlords took part in a poll and over 40% said that they had all experienced higher tenant demand and only just over 6% reported a fall. The market demand was the main determining factor in the series of rent increases that occurred last year. 58% of landlords forecast that new tenants will drastically increase in 2014 and those who expected it to fall was just 10%.
It is estimated that nearly one in five landlords will increase their property portfolios this year and in 2013, 16% of landlords had already increased their amount of properties.
A Director of the property services group David Newnes said:
“The rise in house prices is evidence of the underlying buoyancy in the property market and the stabilising of rent rises is an indication of the current healthy state of the rental sector. Landlords are therefore in a prime position to benefit from the strong yields on properties and aspiring buy-to-let investors can be encouraged by the climbing tenant demand, as not only does it signify the excellent long-term investment opportunity, but also demonstrates the continued appetite for rental homes.
"Demand for rented accommodation is strong, exemplified by the fact that the number of lettings, new viewings and applicants are all rising. There are strong foundations for prosperity in the rental sector, fuelled by increased economic optimism and future job creation. Against the backdrop of growing economic stability, more confidence is driving people forward in search of the attractive deals on offer across the buy-to-let mortgage market, which will allow them to benefit from the attractive returns.”
77% of landlords feel that this is the optimum time to sell or buy rental properties, on the selling front this may well be the case with the advent of the Capital Gains Tax changes coming into force in April.
Out of those who believe that the time is right to invest in more properties, 71% stated that this was due attractive property prices and 50% felt that they would get better capital returns from the sector than from alternative forms of interest on offer. 47% said that the increased tenant demand is the main catalyst in their decision to buy more properties.
Interestingly enough only one in six landlords felt that the availability of cheap finance being the main reason to invest this increased since December 2012 as only one in eleven stated this reason. The poll also highlighted that 35% of landlords stated that it was harder to get mortgage finance compared to twelve months ago.
David Newnes finished by saying:
“While the level of buy-to-let lending has been rejuvenated and is now climbing out of the doldrums, this is still short of historic levels. Securing mortgage finance is therefore not just a concern exclusive to first-time buyers, but remains a real and serious challenge for many landlords. Lending to first-time buyers and those without large deposits has itself seen a pick up but still has a long way to go, and the proportion of UK households is only increasing. It is the rental sector that will be continually needed to pick up the slack.
“Filling the chasm between supply and demand is also reliant on the rising number of buy-to-let investors accessing the affordable mortgages required, thus allowing them to further widen the pool of rental accommodation on offer.”
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