BTL tenancy duration at all time high
Bob Young is managing director of CHL Mortgages
It can be easy to feel overwhelmed by the sheer volume of polls, surveys and indices that populate the private rented sector but there are a few publications that are worth their weight in gold for the patterns and trends they record and predict.
One such release I always look out for is the quarterly research issued by the Association of Residential Letting Agents as it gives those of us who operate in the mortgage part of the process a real idea of what is going on at the coalface.
With more than 500 letting agents responding to the latest survey, the Q2 instalment provides a useful snapshot of tenant behaviour.
Although there are a number of facts and figures as the comprehensive report runs to in excess of 70 pages, one of the statistics that caught my eye concerned tenancy duration.
According to ARLA, the average time tenants stay in a rented property currently sits at 19.7 months which is not only an improvement on the previous quarter, but also pretty much an all-time high.
There will undoubtedly be first-time buyer apologists who point to this being proof of potential homeowners being trapped in the rental market, but I prefer to interpret this stat in a different way.
I believe this shows not only a softening of attitudes and perceptions towards renting rather than buying, but also a continued improvement in the conduct of landlords and their relationships with their tenants.
After all, there is nothing to stop unsatisfied tenants voting with their feet and a record figure shows that more and more are happy to stay where they are.
Indeed, the survey goes on to point out that the difference in proportion between those who haven’t bought because they can’t and those preferring to stay as renters is minimal.
Much of the rest of the findings also make positive reading for landlords. Average weighted returns are unchanged at 5.1% for houses and up 0.2% to 5.4% for flats.
Achievable rent levels nudged up and competition for new properties remains keen with 58% of survey respondents claiming there are more tenants than properties available.
All in all, things look set fair for the buy-to-let market, despite the slings and arrows that are constantly aimed in the private rented sector’s direction from first-time buyers.
I’ve said countless times before that both sectors can thrive at the same time as we saw before the credit crunch – it needn’t be a case of one prospering at the expense of the other.
I was pleased to see an impassioned defence of the buy-to-let market on this very website authored by IMLA executive director Peter Williams – one of the brightest and most interesting commentators around – and I heartily endorse many of the points he made, particularly those echoing my aforementioned sentiments around renting being a choice rather than a sentence.
There is nothing to be gained by those who operate solely in one part of the mortgage market making enemies of those in others and it is better for the overall health of the whole industry – and the economy in general – if all cylinders are firing.
The first-time buyer market may be enduring something of a malaise at present, but it is too simplistic to point the finger at the buy-to-let market and demonise landlords.