Landlords confidence boosted by buy to let buoyancy
Demand for buy to let property has hit a two year high as the number of tenants looking to rent continues to increase.
Four out of 10 landlords said tenant demand grew during the last three months of 2010, compared to 36% in the previous quarter.
Tenant demand has now risen for six consecutive quarters, which has coincided with a shortage of mortgage finance in the owner-occupied mortgage sector, claims buy to let mortgage specialist Paragon.
Nigel Terrington, the lender's chief executive, said: "Tenant demand shows no signs of slowing down and in some busy markets, such as London, there is anecdotal evidence of sealed bids being used for certain properties.
“This will become more commonplace across the UK unless the private rental sector is able to expand to meet higher levels of demand."
The survey also highlighted other upbeat trends to boost landlord confidence:
• More buy to let finance for landlords to expand their portfolios – with one in five landlords confiding mortgage availability was increasing
• Buy to let yields remained steady at 6.1%
• Average buy to let portfolios for Paragon borrowers were 12 properties with an average value of £1.51 million. Average gearing - the level of borrowing as a proportion of the property's value - stood at 37%
• The average void period fell for the second quarter in a row to an average of 2.9 weeks a year
"The prospects for landlords are strong. Tenant demand continues to strengthen, yields are healthy and stable and confidence is high. The housing market is presenting some strong buying opportunities and landlords are well placed to take advantage,” said Mr Terrington.
Meanwhile, another letting market survey by property portal Findaproperty claims demand for some homes for rent is so high that tenants are gazumping each other by offering higher rents than demanded by landlords.
One in eight renters (13%) say they were gazumped in the past year, while 26% have admitted to being gazumpers , according to research by the web site.
