Paragon reveals BTL ‘bounce’
The Paragon Index revealed property values increased by 0.50 per cent, with landlords paying an average property price of £163,417. Quarterly values have increased by 5.72 per cent from November, an increase of £8,849.
Investors have also reported an increase in rents over the past three months by 6.39 per cent, with rental yields also increasing.
The Index went on to reveal a substantial rise in rental demand as a result of an increasing number of tenants entering the market, backed up by The Royal Institute of Chartered Surveyors (RICS) who reported a 24 per cent rise in tenant demand – the largest increase in four and a half years.
Announcing the results, John Heron, managing director at Paragon, said: “Increasing yields, rents and property values are only part of the positive story surrounding the buy-to-let (BTL) market. The beginning of 2005 was relatively slow, but activity picked up in the second half of last year, and 2006 has seen momentum gather and investor confidence grow.”
He added his expectation that the BTL market would continue to grow as a result of current market trends. He said: “The number of households in the UK is growing steadily. Many of these new households will not be able afford to buy their own home and will be reliant on rented accommodation. This reliance is likely to increase as house prices continue to rise, and buyers find it harder to get on the property ladder. This will ultimately lead to an increase in the demand for rented accommodation which is very good news for the BTL market.”
However Alan Lakey, senior partner at Highclere Financial Services, argued that as the BTL market was growing, the first-time buyer market was suffering. He said: “Buy-to-let is a bit of a problem. First-time buyers are continually being squeezed out of the housing market.”