Strong growth in tenant demand has helped boost landlords' confidence in the buy-to-let market over the last three months, a new survey has revealed.Just under half (48%) of landlords believe now is a good time to invest in property, according to LSL Property Services, up from 42% in the previous quarter.
Almost three-quarters (72%) of landlords are planning to maintain or expand the size of their property portfolios over the next twelve months. Playing a significant part in the increase in confidence is the rising demand for rental accommodation.
With a limited supply of properties to rent, rents are being pushed up to leave landlords feeling less concerned that their properties will be unoccupied.
In the past three months, half of landlords have seen a rise in tenant demand contributing to rents reaching a record high in September of £689 per month. Almost three quarters (69%) of landlords expect rental demand to grow in the next twelve months.
"With mortgage lending conditions so tight and uncertainty over the direction of house prices, many would-be buyers are choosing to stay in the private rented sector for the time being," said David Brown, commercial director of LSL Property Services.
"The Government's spending review last month is expected to swell the ranks of tenants as potential social tenants opt to enter the private rented sector, instead of facing long waiting lists for social housing where they can expect to pay 80% of market value.
"An increase in the supply of rental accommodation will be necessary to meet this demand, and many landlords recognise this as an opportunity for investment."
Despite the growing optimism, landlords said the main barrier preventing them from expanding their property empires remained the ongoing buy-to-let mortgage finance constraints. However, there are signs that the situation may be starting to ease, with a number of new buy-to-let mortgages having been released by lenders in recent weeks. Mortgage brokers surveyed recently by Paragon also reported an improvement in the availability of buy-to-let mortgages during the third quarter of 2010.
"More lenders are now starting to enter the market, which should mean there are more affordable products available to landlords," added David Brown.
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