Rental demand

Rental demand

The nation's capital has held onto its reputation as one of the more secure housing markets in the country, enjoying the highest increase in property price rises (0.7 per cent) over the past year, according to the latest figures released by the Land Registry House Price Index.

However, in spite of London's success, the overall performance in England and Wales was disappointing, as an average 0.6 per cent decline was witnessed in the last 12 months.

Given the continued struggle in the housing market and its apparent inability to mount a sustained recovery, more first-time buyers may be drawn to the private rented sector to avoid the potential pitfalls of negative equity if prices experience further annual falls in the coming years.

Yet while this may not be promising news for homeowners hoping to sell, UK property investment could benefit as landlords look to take advantage of the conditions.

Indeed, the latest figures from Paragon Mortgages show that 35 per cent of current landlords are planning to expand their portfolio over the course of the next year, reflecting the continued attraction of the private rented sector to investors.

John Heron, director of Paragon Mortgages, said: "Whilst landlords are still benefitting from attractive market conditions, there is still a long way to go to meet the increasingly high level of tenant demand.

"More investment across the private rented sector is needed during the coming year to help to meet this demand."

Despite property prices in the capital outstripping those in the rest of the country, its pull as a strong economic centre for both investors and tenants remains strong, meaning buy-to-let in London could also continue to be an appealing prospect.

If demand for rented accommodation does increase in future months, it seems landlords will face little difficulty in letting new properties.