LSL Property Services reports that a rising number of landlords in the United Kingdom (UK) believe that now is a good time to buy property to convert into rentals. Of the 48% of landlords who think investment is a good idea 82% say it’s because there are many well-priced properties on the market. A majority also agree that it’s a good idea because tenant demand is rising and statistics show the sentiment to be correct. Prospective first-time homebuyers still face large hurdles in obtaining financing to enter homeownership and a turbulent economy is putting fewer people in a position to buy. For more on this continue reading the following article from Property Wire.
UK private rented sector Landlords’ confidence in buy to let has been bolstered by strong tenant demand and attractive purchase prices, according to a new survey.
Nearly half, 48%, of landlords 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.
Some 82% of those who think now is a good time to buy rental property cited attractive property prices, while 53% mentioned strong tenant demand.
‘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,’ said David Brown, commercial director of LSL Property Services.
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 and 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.
The survey also found that 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%.
‘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,’ explained Brown.
While nearly half of all landlords think now is a good to buy rental property, raising mortgage finance remains a key concern. Some 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.
‘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,’ he added.
This article was republished with permission from Property Wire.