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Landlords make hay in final quarter of 2011

Landlords make hay in final quarter of 2011

Category: Buy To Let

Updated: 07/02/2012
First Published: 07/02/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Landlords enjoyed a prosperous final three months of 2011 as tenant demand continued to grow.

The rental sector was buoyant last year, as many would-be buyers blocked from the mortgage market because of high prices and deposits turned to the market.

Landlords reported that they had achieved their highest average yield – the annual rental income as a percentage of a home's value for the year – during the fourth quarter, reaching 6.6% compared to 6.1% in the third quarter, according to Paragon Group.

Returns were boosted by increasing numbers of people looking to the rental market.

Half of landlords said that they had seen demand from tenants either 'grow' or 'boom' in the final quarter of the year, an increase from 44% in the third quarter of the year.

The trend looks set to continue into 2012, with 56% of landlords saying that demand will continue to increase.

"The final quarter of last year proved to be very positive for landlords and for many of those that provided feedback in the trends survey, the most successful quarter of the year," said Nigel Terrington, chief executive of Paragon Group.

"It is no surprise with the ongoing pressures on the wider housing sector that landlords are still experiencing increasing tenant demand, which looks set to continue throughout the coming 12 months."

As well as more people looking to rent, landlords said that buy-to-let availability is improving too.

More than a quarter (27%) of landlords said that finance improved in the third and fourth quarters of the year, compared with 22% and 17% in the second and first quarters of 2011 respectively.

A fifth of landlords plan to take advantage of the increased availability of buy-to-let mortgages, with terraced housing the most popular type of home.

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