Landlords looking for more buy to lets

One in six landlords would like to buy more property to let if they could raise the finance from mortgage lenders.

Steady demand and high yields are encouraging landlords to expand their property portfolios, according to the latest quarterly buy to let survey from specialist lender Paragon Mortgages.

Of the 16% of landlords seeking more rental property – 58% want flats, maisonettes or terraced houses; 30% prefer semi-detached houses and 21% are viewing detached homes.

More than 90% of landlords reported strong demand for tenants looking to rent a home during the quarter ending September 31.

Splitting the figure, Paragon said 57% of landlords felt tenant demand was stable, while just over a third (34% ) cheered growing or booming demand, but 6% reported interest was waning – the lowest level this year.

Landlords were hopeful demand would stay steady for the next 12 months. More than a third (39%) forecast tenant demand will rise, while 46% see a steadier market and 6% expect demand to fall.

Voids between tenancies are also dropping – with buy to let homes empty for an average 19.6 days after tenants move out.

Just over two-thirds of landlords (68%) had seen no change in rents over the previous year, while 27% were earning more and 5% less.

Yields averaged 6.2%, but landlords with larger portfolios registered an average 6.6%, while those with fewer properties reported an average 5.2%.

Asked about likely changes in returns on investment, most expect a 6.2% yield in a year’s time.

John Heron, Managing Director of Paragon Mortgages, said: “It has been a stable quarter for landlords. Yields have remained healthy and at a consistent level for the past 12 months.

“It is not surprising that landlords are continuing to see high levels of tenant demand and I suspect this will continue into Q4 and the coming year. The PRS is under increasing strain with the growing shortage of homes in the UK, housing policy needs to focus more on motivating private landlords to grow their portfolios to better meet demand.”