Landlords look to expand portfolios

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property investment

48% of landlords polled by LSL Property Services think that now is a good time to invest in property, while under 1% believe it is now a good time to reduce their portfolios.

82% who think now is a good time to buy rental property cited attractive property prices, while 53% strong tenant demand.

“House prices are still subdued in many parts of the country and tenant demand is still growing,” said David Brown, commercial director of LSL Property Services.

“This is presenting landlords with the opportunity to secure strong yields on properties, and boosting confidence in buy-to-let as a long-term investment.”

LSL’s latest Buy-to-Let Index revealed that rents hit a record high of £725 in England & Wales in July. In the past six months, 44% of landlords have seen a rise in tenant demand, while just 1% have seen a decrease in demand. Investors expect this growth to continue. 64% of landlords expect demand to increase further in the next 12 months.

Four in 10 landlords expect to increase rents in the coming 12 months, with only 1% of investors expecting they will reduce rents. Those expecting to raise rents anticipate they will do so by an average of 4.5%.

Brown added: “The majority of landlords expect tenant demand will increase in the future, and as long as lending to first-time buyers remains in the doldrums, and new house building remains subdued, we won’t see demand for rental accommodation tail off. In these conditions, while affordability may increasingly come into play as landlords set rents, they are far more likely to continue to rise than tumble in the coming 12 months.”

Meanwhile, 50% of landlords who have recently attempted to raise mortgage finance think it is more difficult to secure than a year ago, while only 11% believe it is now easier to obtain mortgage finance.

At the same time, 45% of landlords who have recently taken out a mortgage reporting that monthly payments are more expensive than one year ago.

“Mortgage finance is not just a problem limited to first-time buyers,” said Brown. “The level of buy-to-let lending may be steadily climbing, but it is still just a third of the level five years ago, and securing finance remains a serious stumbling block for many landlords.

“The private rented is still crying out for more investment, and closing the gap between supply and demand is dependent on a growing number of investors being able to access the affordable mortgages they need to increase the pool of rental properties available.”

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