Buy-to-let market strong

A substantial majority of residential landlords believe that demand for rental properties is either stable or increasing, according to a new survey.

15:44 09 June 2004

A substantial majority of residential landlords believe that demand for rental properties is either stable or increasing, according to a new survey.

Paragon Mortgages' market survey revealed that over half (55 per cent) of UK landlords describe tenant demand as "stable", while over a quarter (26 per cent) have seen a rise in demand, the FindaProperty website reports.

After a long slump, rental returns (the percentage of the property's value earned in rent) continue to edge up and now stand at 7.3 per cent.

However, landlords remain cautious regarding the future, according to Paragon Mortgages' managing director John Heron. He said: "There may be signs that yields are firming a little, but landlords remain a cautious breed, so they are doing their sums on the basis that yields could decline a little more.

"On the other hand, they do see good levels of tenant demand at present and in the future, yields still compare favourably with other forms of investment and, as a consequence, investors continue to buy with confidence."

Confidence in the future is borne out by landlords' plans to continue to build their property holdings.

On average, they expect to grow their portfolios by six per cent in terms of property numbers, and by five per cent in terms of value over the next twelve months.