Demand for rental property marches on

Category: Money
Date: 7/20/2010

While the mortgage market is going through something of a slump, the rental sector appears to be enjoying a period of sustained growth.

New figures have revealed that three times as many landlords reported a rise in tenant demand rather than a fall in the second quarter of the year.

By contrast, it was reported yesterday that the gains in property value in the mortgage market seen in the first half of 2010 are expected to be wiped out in the last six months of the year.

Paragon Mortgages has said that 29% of landlords reported growing levels of tenant demand during the second quarter of the year, compared with just 10% who said it was falling.

Both of the measures increased in the second quarter, up from 24% of landlords who said demand rose and 8% who said it fell from January to March this year.

The majority of landlords (54%) said that demand was stable, while 7% said they were unsure of which direction demand was heading in.

In addition, over a third of landlords expect demand to be higher in 12 months' time, with only 8% forecasting a decline.

"Tenant demand has been rising consistently for two years and shows no signs of slowing down," commented Nigel Terrington, chief executive of Paragon Group.

"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."

However, despite rising demand, buy-to-let investors have reported that they are still finding it difficult to secure credit.

Of the landlords that attempted to secure funding in the last quarter, more than half (52%) said that it was more difficult than previous attempts, with just 13% stating it was easier.

"Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand," Mr. Terrington warned.

"Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios."

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