UK PRS Landlords Expect Tenant Demand To Increase

UK PRS Landlords Expect Tenant Demand To Increase

UK PRS Landlords Confident About Continued

Strong Tenant Demand

As we reported yesterday (UK Property Boom ContinuesSpotlight – 7th January 2014), the private rented sector boom looks set to continue throughout 2014 and a recent survey conducted by LSL Property Services, has discovered that six in ten UK private rented sector landlords agree.

The LSL survey of 2,195 private rental sector landlords found:

  • 58% of UK PRS landlords are confident that tenant demand will continue to increase over the next twelve months
  • 41% of UK PRS landlords reported growth in tenant demand in past six months
  • 16% of UK PRS landlords expanded rental property portfolios during 2013
  • 18% of UK PRS landlords expect to expand their rental property portfolios in 2014
  • 10% of UK PRS landlords expect tenant demand to fall
  • 6% of UK PRS landlords experienced a drop in tenant demand
  • 77% of UK PRS landlords believe now is a good time to buy or sell rental property
  • 71% of landlords cited attractive property prices
  • 50% of UK PRS landlords highlighted better capital returns on offer compared to other types of investments
  • 47% of landlords said that strong tenant demand was a key investment driver

Director of LSL Property Services, David Newnes, said: “The rise in property prices is evidence of the underlying buoyancy in the UK property market and the stabilising of rent rises is an indication of the current healthy state of the private rental sector. Landlords are therefore in a prime position to benefit from the strong yields on properties and aspiring buy-to-let investors can be encouraged by the climbing tenant demand, as not only does it signify an excellent long-term investment opportunity, but also demonstrates the continued appetite for rental homes. Demand for rented accommodation is strong, exemplified by the fact that the number of new tenancies, viewings and tenant applications are all rising. There are strong foundations for prosperity in the UK private rental sector, fuelled by increased economic optimism and future job creation. Against the backdrop of growing economic stability, more confidence is driving people forward in search of the attractive deals on offer across the buy-to-let mortgage market, which will allow them to benefit from the attractive returns. While the level of buy-to-let lending has been rejuvenated and is now climbing out of the doldrums, this is still short of historic levels. Securing mortgage finance is therefore not just a concern exclusive to first-time buyers, but remains a real and serious challenge for many landlords. Lending to first-time buyers and those without large deposits has itself seen a pick up but still has a long way to go, and the proportion of UK households is only increasing. It is the rental sector that will be continually needed to pick up the slack. Filling the chasm between supply and demand is also reliant on the rising number of buy-to-let investors accessing the affordable mortgages required, thus allowing them to further widen the pool of rental accommodation on offer.”

Despite improvements in the availability and affordability of buy-to-let mortgages, only 60% of UK PRS landlords believe that the availability of cheap finance is a major factor of why now is the best time to invest.

For some private rental sector landlords, mortgage challenges remain a deeply contentious issue, with 35% of UK PRS landlords stating that they have had increased difficulty raising buy-to-let mortgage finance compared to last year.

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