The latest data published by the Association of Residential Letting Agents (ARLA) has revealed another upward trend in landlord investment and property portfolio building, despite the poor availability of adequate Buy-To-Let mortgages.
The number of UK PRS rental properties owned by landlords increased from seven at the beginning of 2012 to 8 in the final quarter of 2012, with on average, at least 1 of these properties being a HMO.
The apparent rise in confidence in the UK rental market due to unprecedented tenant demand has prompted increased landlord activity, with 29% stating they have bought a new rental property in the past year compared to just 25% a year ago.
The rise in landlord confidence is also reflected in the jump in value of Buy-To-Let mortgages, with an 8% increase in the final quarter of 2012 totalling £4.2 Billion (GBP), according to the Council of Mortgage Lenders (CML).
Ian Potter, managing director of ARLA, said: “The latest data suggests that landlords are carefully but concertedly increasing their portfolios.”
The lack of suitable Buy-To-Let mortgage products available up to the middle of 2012 did not encourage landlord confidence to expand their property portfolios and landlords were forced to rethink the nature of their rental income sources, with landlords in some areas using the lack of finance to diversify their rental portfolio’s and converting existing family rental properties in to Houses of Multiple Occupation (HMO’s) in order to cope with tenant demand.
However, it seems that the introduction of the UK Government’s Funding for Lending Scheme (FLS) has had the desired effect on mortgage lenders, encouraging them to seek new business rather than sit on the assets they already had a financial interest in.
New Buy-To-Let mortgage products are being introduced to the market with refreshing regularity since the middle of 2012 and smart landlords who are in a position to apply for mortgage finance are wasting little time cashing in and buying up suitable properties for rental purposes, with larger properties being turned into House of Multiple Occupation (HMO’s).
HMO’s are becoming very popular with landlords actively expanding their property portfolios, due to the government’s welfare reforms forcing many tenants who were previously entitled to the full housing benefit allowance being forced to seek alternative accommodation as their benefits are cut.
There will continue to be extremely high tenant demand from the under 35’s in the UK until there is a major rethink on the UK welfare state.
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