Tenant demand grows

Nia Williams

July 19, 2010

The quarterly snapshot of the private rented sector and buy-to-let market shows that 29% of landlords recorded growing levels of tenant demand during the period, compared to 10% who said it was falling.

Both of these measurables increased compared to the first quarter of the year, when 24% of landlords reported growing tenant demand and 8% reported falling levels of demand. Tenant demand was stable for the majority of landlords during the second quarter (54%), whilst 7% said they were unsure which direction demand was heading.

Looking forward, landlords expect tenant demand to strengthen considerably. Over a third of landlords (35%) expect demand to be higher in 12 months’ time, with 8% forecasting a decline.

Nigel Terrington, Paragon Group chief executive, said: “Tenant demand has been rising consistently for two years and shows no signs of slowing down.

“Would-be home buyers continue to be unwilling or unable to step onto the property ladder, whilst longer-term social changes, such as greater numbers of single person households and economic migrants, are also creating more demand for rented property.

“Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand.

“Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios.”

The Q2 2010 PRS Trends Report, which covers the three months to June 30, also shows:

There was a significant increase in the proportion of landlords planning to purchase, with one in five (21%) intending to purchase during the third quarter of the year, up from 12% who said they wanted to purchase in the second quarter

Buy-to-let mortgage finance remained constrained. Four out of 10 landlords said that they attempted to secure buy-to-let finance for purchase or remortgage purposes during the second quarter, with 52% of those saying that it was more difficult than previous attempts to secure finance, with just 13% stating it was easier

Both yields and portfolio values remained steady during the quarter at 6% and £1.5 million respectively

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