Tenant demand continues on the up

Nearly half of landlords reported that tenant demand rose during the first quarter of 2011.

But landlords also said they were finding that buy-to-let mortgage finance availability was remaining low, hampering their ability to grow their portfolios.

Buy-to-let mortgage specialist Paragon's latest Private Rented Sector Trends Report, which provides a quarterly snapshot of the buy-to-let market, shows that 49% of landlords recorded growing levels of tenant demand during the period, compared with just 5% who said it was falling.

The proportion of landlords reporting growing tenant demand was up from 40% during the final quarter of 2010. The proportion of landlords reporting increasing levels of tenant demand has now risen for seven consecutive quarters.

Looking forward, landlords expect tenant demand to continue strengthening, with over half (52%) expecting demand to increase over the next 12 months, and only 6% forecasting a decline.

Nigel Terrington, Paragon group chief executive, said: "Landlords are experiencing high levels of tenant demand, and this is expected to rise due to a number of factors, including social housing reforms, lifestyle choices, low numbers of first-time buyers and wider demographic changes.

"We are seeing evidence that strong tenant demand is feeding through to higher rents. A lack of available mortgage finance is restricting the sector's ability to expand and needs to be addressed to create a healthy and vibrant buy-to-let market in the UK."

Over six in ten landlords (64%) said that mortgage availability was limited. The average number of properties in a portfolio stood at 13, with an average weighted portfolio value of £1.51m.


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