Tenant Demand Stable or Growing

Tenant demand for property is remaining stable or growing in the private rental sector amid government intervention.

New data from Paragon Mortgages’ latest Private Rented Sector (PRS) report found that that 94 per cent of landlords experienced tenant demand as either stable or on the rise. As a result of this, void periods have also remained steady, with 48 per cent of survey respondents saying that their properties were unoccupied for less than two weeks. Average yields were also stable at 6.1 per cent.

Uncertainty had previously pervaded the buy to let sector, following the Government’s plans to increase stamp duty, compounded with reductions in tax relief on buy to let mortgage interest. 25 per cent of buy to let investors had expected to sell property in the first quarter of 2016 as a result of this. However, this figure has since dropped to 17 per cent for Q1 2017.

As landlords become increasingly aware of the impact of the tax changes they have begun to develop management strategies, leading to a growing confidence in the sector. The proportion of landlords hoping to expand their portfolios reached 13 per cent in the first quarter of 2017, up from a record low of 9 per cent a year earlier.

The most popular property option for landlords to purchase was terraced houses, at 62 per cent. For flats and maisonettes and semi detached houses the proportions stood at 31 per cent and 23 per cent respectively.

Managing Director of Paragon Mortgages, John Heron, said: ‘With no material improvement in the supply of new housing against a background of strong population growth and household formation, it is no surprise that landlords are continuing to experience strong rental demand. It is promising therefore that there has been some improvement in landlord buying intentions albeit from a low base. Any boost this gives to improving supply to the sector, however, needs to be balanced against the additional upward pressure that we are likely to see in rents as a result of the phased impact of the changes to the taxation of rental income.’

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