Tenant demand and healthy rental yields

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06th February 2012

Tenant demand and healthy rental yields

Paragon revealed that landlords are experiencing healthy yields, low void periods and a rise in rental income.

Its Private Rented Sector Trends report recorded that 44 per cent of landlords said tenant demand increased in the third quarter, and just 4 per cent said it declined. Almost half (49 per cent) said they expect demand to keep growing over the next 12 months. In addition, 34 per cent of landlords said their rents had risen in the last quarter, with just 4 per cent recording a drop.

Nigel Terrington chief executive of Paragon, said, "Tenant demand has continued to increase for a third quarter, which is perhaps not surprising considering the current squeeze on the UK housing market as a whole. More people than ever before are relying on the private rented sector so it is positive to see that landlords are looking to invest in their portfolios and are also diversifying the types of property in which they are investing in order to meet tenant demand."

The report also found that there has been a shift in the types of properties that landlords are looking to purchase. Terraced houses were the most popular choice at 41 per cent followed by flats at 35 per cent and then bungalows that have surged in popularity from 2.7 per cent in the second quarter to 10 per cent in the third quarter.

Paragon's PRS Trends Report also shows that yields dropped only very slightly from 6.2 per cent in the second quarter to 6.1 per cent and average portfolio value increased from £1.42 million in the second quarter to £1.48 million in the third quarter.

There was a continued improvement in the perception of availability of buy to let finance, with 27 per cent of landlords saying they thought it was at least reasonably available and the average void period for the third quarter was 2.8 weeks.

It also found that one in 10 landlords are currently using social media channels for business purposes, mainly Twitter and Facebook, to advertise vacant properties for rent.