Expected tenant demand to fuel BTL investment

Nia Williams

February 6, 2013

Over the next 12 months 15% of landlords surveyed said they expected to purchase a new buy-to-let property.

Landlords were also asked to determine what they considered to be the most important factors for their business over the coming year. The majority (83%) said the most relevant factor was rental demand, 69% said rent levels and 46% said tenant arrears.

Other key facts from the survey include:

• Landlords’ average portfolio size in Q4 was 12.7 properties – this is expected to increase to an average of 13.2 in the next 12 months

• The average yield achieved by landlords was 6.5%

• The average void period reported was 3.0 weeks per annum

Of those looking to invest 47% are expecting to purchase terraced houses and flats or maisonettes.

Almost a third (30%) of landlords are looking to buy semi-detached houses and 20% plan to purchase multi-unit blocks.

The least popular investment choices were HMOs (13%) and detached houses (10%).

John Heron, managing director of Paragon Mortgages, said: “2012 was a good, steady year for landlords. They continued to invest in their property portfolios, albeit at a slower pace than needed for the PRS to cope with increasing levels of tenant demand.

“The next 12 months will be very interesting for the PRS and the buy-to-let market, there will be continuing progress and we will hopefully see confidence levels increase even further.”

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