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UK Buy-To-Let landlords experience a stable 3rd quarter of 2012

  • 91% of UK Buy-To-Let landlords think that tenant demand in the UK is either stable or increasing.

    Rental Yields Up, Tenant Demand Up - UK landlords Are Happy!

    Rental Yields Up, Tenant Demand Up – UK landlords Are Happy!

The findings come from the latest Paragon Mortgages PRS Trend survey and a huge number of landlords surveyed reckon that tenant demand was either stable or growing.

  • Only 6% of landlords who took part in the survey said that, in their opinion, tenant demand was declining.

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

  • Stable and healthy yields were achieved in the third quarter, 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.

68% of landlords who agreed to take part in the survey said that their rental income had remained the same during the third quarter, whilst 27% said that rents had increased, just 5% of landlords had experienced a decrease in rent.

The average void period slightly increased to 2.8 weeks compared to 2.7 weeks in the 2nd quarter of the year, however void periods continue to remain low and have not exceeded three weeks since mid-2010.

Landlords are set to continue expanding their property investments in the final quarter of the year, with 16% planning to expand their rental property portfolios.

  • 58% are expecting to buy flats/maisonettes or terraced houses
  • 30% semi-detached houses
  • 21% are looking to buy detached properties.

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.”

Mortgage professionals have reported that Buy-To-Let (BTL) business was responsible for 21% of new introductions in the first quarter of this year.

Remortgaging was responsible for 41% of new business and next-time buyers 23%.

Specialist mortgage lender, Paragon, released the data this week as part of their quarterly FACT survey. They asked mortgage intermediaries for their views on the condition of the mortgage market, as they see it.

  • 79% expect growth in the Buy-To-Let market this year.
  • 35% said Landlord demand was strong
  • 46% said demand was stable

Intermediaries also reported an increase in first-time landlords.

The following reasons were stated for landlords obtaining a Buy-To-Let mortgage in the first quarter of 2012.

  • 39% – portfolio expansion
  • 31% – remortgages
  • 23% – first-time landlords
  • 5% – property substitution
  • 2% – other

Director of Paragon Mortgages, Mr John Heron, said: “Whilst we are not back to post-credit crunch business levels, and will not be for some time, there has been a steady improvement in buy-to-let business. It is particularly interesting to see the increase in first-time landlords entering the market. This not only demonstrates confidence in the market but also that buy-to-let remains an attractive business.”

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