The 2012 Landlord Survey from LSL Property Services, in partnership with Wriglesworth Consultancy, has been released today reviewing the current rental market.
- Half of landlords think it is a good time to invest
- 64% of landlords expect tenant demand to grow in next 12 months
- Four in ten landlords expect to raise rents in the coming year
- Mortgage finance remains obstacle for expansion of private rented sector
Landlords’ confidence in buy-to-let has been bolstered by strong tenant demand and attractive purchase prices, according to a landlord sentiment survey conducted by LSL Property Services plc, which owns the UK's largest lettings agent network, including national chains Your Move and Reeds Rains.
Nearly half of landlords (48%) polled by LSL Property Services believe that now is a good time to invest in property, while less than 1% think it is now a good time to reduce their portfolios. Four-fifths of landlords (82%) who think now is a good time to buy rental property cited attractive property prices, while 53% mentioned strong tenant demand.
David Newnes, director of LSL Property Services, comments: “House prices are still subdued in many parts of the country and tenant demand is still growing. This is presenting landlords with the opportunity to secure strong yields on properties, and boosting confidence in buy-to-let as a long-term investment.”
The strength of tenant demand has been the key driving force behind recent rent rises, with LSL’s latest Buy-to-Let Index showing rents hit a record high of £725 in England & Wales in July. In the past six months, 44% of landlords have seen a rise in tenant demand, while just 1% have seen a decrease in demand. Investors expect this growth to continue. Two thirds of landlords (64%) anticipate demand will increase further in the next twelve months.
Four in ten landlords expect to increase rents in the coming 12 months, with just one in a hundred investors expecting they will reduce rents. Those expecting to raise rents anticipate they will do so by an average of 4.5%.
David Newnes continues: “The majority of landlords expect tenant demand will increase in the future, and as long as lending to first-time buyers remains in the doldrums, and new house building remains subdued, we won’t see demand for rental accommodation tail off. In these conditions, while affordability may increasingly come into play as landlords set rents, they are far more likely to continue to rise than tumble in the coming 12 months.”
Mortgage Finance Remains a Stumbling Block
While nearly half of all landlords think now is a good to buy rental property, raising mortgage finance remains a key concern. 50% of landlords who have recently attempted to raise mortgage finance think it is more difficult to secure than a year ago, while only 11% believe it is now easier to obtain mortgage finance.
The cost of finance remains an issue, with 45% of landlords who have recently taken out a mortgage reporting that monthly payments are more expensive than twelve months ago
David Newnes continues: “Mortgage finance is not just a problem limited to first-time buyers. The level of buy-to-let lending may be steadily climbing, but it is still just a third of the level five years ago, and securing finance remains a serious stumbling block for many landlords. The private rented is still crying out for more investment, and closing the gap between supply and demand is dependent on a growing number of investors being able to access the affordable mortgages they need to increase the pool of rental properties available.”