A new report just released by Paragon Mortgages, which reveals the latest trends in the private rental sector (PRS), shows a steady market. Taking key indicators into account such as yields, void periods and tenant demand, the overall picture is one of healthy growth.
John Heron, director of mortgages at Paragon Mortgages said: “Our latest PRS Trends Survey data is indicative of a market growing steadily and sustainably over the long-term.
With low void periods and steady tenant demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so.
The survey, which relates to Q3 of this year, shows a rise in average yields over the last three months from 6.3% to 6.4%.
This is in line with the growth observed throughout 2015 and landlords, when surveyed, remained confident that yields will remain stable over the next 12 months.
There was more good news regarding supply. Void periods, the average period of time PRS properties spend unoccupied per annum, are at a historically low level of just below 2.6 weeks.
Tenant demand is also healthy, with more than half of landlords describing demand as stable and more than 40% saying they are experiencing either ‘growing’ or ‘booming’ demand.
The forecast for expected demand is bright with over half of landlords confident that demand will increase over the next 12 months, as opposed to 42% who expect it to remain stable.
While demand for longer term rental agreements remains relatively low, the survey pointed to an increase in young families with children moving into the PRS, along with a corresponding decrease in young couples and professionals.
“The data also reveals the changing demographic of those choosing to live in the PRS. This is reflected in the buying intentions of landlords which seem to be shifting slightly away from investing in multi-occupancy blocks, towards terraced housing – often more suited to young families,” said John Heron.
We will shortly be releasing our Q3 Complex Buy to Let Index, in the meantime see our Q2 results.