Tenant demand remains strong

Robyn Hall

October 1, 2012

When asked about tenant demand levels in the third quarter nine out of ten landlords said they thought that demand was stable or growing. Just 6% of landlords said that, in their opinion, demand was declining.

John Heron, managing director of Paragon Mortgages, said: “It has been a stable quarter for landlords. Yields have remained healthy and at a consistent level for the past 12 months.

“It is not surprising that landlords are continuing to see high levels of tenant demand and I suspect this will continue into Q4 and the coming year.

“The PRS is under increasing strain with the growing shortage of homes in the UK, housing policy needs to focus more on motivating private landlords to grow their portfolios to better meet demand.”

Landlords reported an average property portfolio size of 12.5 properties in Q3. In terms of expectations, landlords anticipate this will increase to 12.9 properties in 12 months’ time.

Stable and healthy yields were achieved in Q3, with a reported average of 6.2%.

Professional landlords achieved a higher average yield than smaller-scale landlords – 6.6% compared to 5.2%. Landlords are expecting to retain a stable yield for the foreseeable future, forecasting an average of 6.2% in 12 months’ time.

More than half (68%) of landlords questioned said that their rental income had remained the same during Q3, whilst 27% said that it had increased and 5% had experienced a decrease.

The average void period (per year) slightly increased to 2.8 weeks compared to 2.7 weeks in Q2, however void periods continue to remain low and have not exceeded three weeks since mid-2010.

Landlords are set to continue on the investment trail in the final quarter of the year, with 16% planning to purchase further rental property. Of those planning to invest 58% are expecting to buy flats/maisonettes or terraced houses, 30% semi-detached houses and 21% are looking to buy detached properties.

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