ALMOST half of landlords reported that tenant demand rose during the first quarter of 2011, according to a report by buy-to-let mortgage specialist Paragon.
The company’s latest Private Rented Sector Trends Report showed that 49% of landlords recorded growing levels of tenant demand during the period, compared with just 5% who said it was falling.
The proportion of landlords reporting growing tenant demand was up from 40% during the final quarter of 2010. The proportion of landlords reporting increasing levels of tenant demand has now risen for seven consecutive quarters.
Looking forward, landlords expect tenant demand to continue strengthening with 52% expecting demand to increase over the next 12 months and only 6% forecasting a decline.
Nigel Terrington, Paragon chief executive, said: “Landlords are experiencing high levels of tenant demand and this is expected to rise due to a number of factors, including social housing reforms, lifestyle choices, low numbers of first-time buyers and wider demographic changes.
“We are seeing evidence that strong tenant demand is feeding through to higher rents. A lack of available mortgage finance is restricting the sector’s ability to expand and needs to be addressed to create a healthy and vibrant buy-to-let market in the UK.”
The report also showed that buy-to-let mortgage finance availability remains low – 64% of landlords said that availability was limited.
However, landlord confidence strengthened, with 23% of landlords saying they were more optimistic about the performance of their property portfolio. Yields increased to 6.2% – the highest level since the final quarter of 2009
The average number of properties in a portfolio stood at 13, with an average weighted portfolio value of £1.51m. Average gearing – the level of borrowing as a proportion of the property’s value – stood at 41% while the average void period fell for the third quarter in a row to 2.8 weeks a year.
Said Mr Terrington: “Landlords have experienced a positive start to the year. Tenant demand continues to strengthen, yields are rising and confidence is high.
“Prospects for landlords in the private rented sector are high and they can expect this to continue throughout and beyond 2011.”