Experts believe this is an excellent time to buy to let as yields and portfolio values are holding steady.
The number of private rented properties in the UK currently stands at 3.2 million as ‘the in-betweens’, those on incomes between £12,000 and £25,000, struggle to purchase their own property.
Sarah Webb, chief executive of the Chartered Institute of Housing (CIH) feels this means the on-going shift from private ownership to rented accommodation is here to stay for the foreseeable future.
She explained: “The ‘in-betweens’ do everything the government asks - working and generally not claiming benefits - but they have been forgotten when it comes to their housing needs and aspirations.
“The report shows that home ownership is out of reach for a lot of people and we need to move to a situation where renting is a positive choice.
“A golden age of home ownership is coming to an end. The time has come to move away from the notion of ‘right-to-buy' and ‘wrong-to-rent'.”
For the investor-landlord, this ‘in-between’ market provides a ready-made supply of prospective tenants.
The Paragon Mortgages’ PRS Trends Report confirms residential property is a strong investment vehicle.
The quarterly snapshot of the private rented and buy to let sectors shows 29 percent of landlords recorded growing levels of tenant demand, compared to 24 percent in the first quarter.
Looking forward, over a third of landlords expect demand to be higher in 12 months’ time.
Nigel Terrington, chief executive at Paragon Group, said: “Tenant demand has been rising consistently for two years and shows no signs of slowing down.
“Would-be home buyers continue to be unwilling or unable to step onto the property ladder, whilst longer-term social changes, such as greater numbers of single person households and economic migrants, are also creating more demand for rented property.”
The Q2 2010 PRS Trends Report also shows:
- A significant increase in the proportion of landlords planning to purchase in the third quarter of the year. This is now at 21 percent, up from 12 percent in the second quarter.
- Both yields and portfolio values remained steady during the quarter at six percent and £1.5 million respectively.
- Landlords said a wider availability of mortgage finance, tax incentives and sustained levels of tenant demand encourages further investment in the private rented sector.
