Landlords respond to surge in tenant demand with positive outlook on rental market

Figures have been released following a sentiment survey of over 1,100 landlords, which has been conducted by Your Move and Reeds Rains. Many are predicting a positive outlook within the rental market over the next year, with over a fifth of landlords seeking to expand their property portfolios.

Over the last 6 months, 41% of landlords surveyed have seen a significant surge in tenant demand. With the rental market becoming more stable, 18% of landlords have recently added to their portfolio of properties.

David Newnes, director of Your Move and Reeds Rains, comments: “Demand for rented accommodation is climbing, and there’s little sign of this stopping.

“This demand is also powering more supply. Secure house prices and spirited tenant demand are encouraging budding buy-to-let investors and existing landlords to add to the number of available homes to let.”

Though many of the landlords surveyed say UK rental prices are expected to see an overall rise by 1.8% on average, this is below the Bank of England’s target rate of inflation of 2% – representing a slowing in the page of annual rent growth.

A recent Buy-to-Let Index from Your Move and Reeds Rains reported the average residential rent rate is increasing by 2.4% annually. However the majority of landlords aren’t planning to raise their rental prices within the next year, with only 43% planning to do so in the near future.

Of those who intend to up their rental prices, many say the cost of inflation is the main reason for doing so, with nearly 4 in 10 landlords experiencing higher buy-to-let mortgage payments within the last 12 months.

That said, it’s a seemingly opportune juncture for investors, with 21% of landlords deeming it a good time to invest in buy-to-let. Over a half of landlords see tenant demand as the primary motivation for investment, along with other key reasons including attractive property prices, and more positive capital returns compared to other investments.

The recent CML Monthly Lending Trends Statistics for August 2014 have shown a decline in house purchase lending since the beginning of the year. However the amount of buy-to-let loans has seen an increase since the same period in 2013.

Newnes added, “Balancing the asymmetry between supply and demand depends on the growing number of buy-to-let investors being able to acquire affordable mortgages, in order to broaden the pool of rental accommodation on offer and keep rent rises at sustainable levels.

“The government and Bank of England need to ensure that any further regulatory changes do not lift lending out of reach for good applicants, and destroy growth at the same time. The benefits of more investment will be felt in tenants’ back pockets at the end of the month, as the strain of rent rises eases further.”

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