Rise in number of landlords reporting increased tenant demand

Couple checking properties for rent in shopfront.

Tenant demand continues to grow according to new figures which report a rise in the number of landlords witnessing an increase in people looking for rented properties.

Paragon’s PRS Trends Report for Q3 2019 found 29% of all landlords reported higher demand for rental property, the highest proportion in almost a year. The rise returns the figure to roughly the same level it was in Q2 2017 (30%) after a substantial drop in Q1 2019 to 21%.

Despite the higher demand, the majority of landlords remain wary to expand in an increasingly difficult market, with only 8% of landlords planning to buy in the next quarter and 22% planning to sell.

The report suggested a marked difference in the ambitions of small and large scale landlords, with professional landlords continuing to make targeted, strategic investments despite jitters in the PRS. Smaller non-portfolio landlords are more likely to maintain or divest, the research found.

Overall the average portfolio stood at 13.2 properties, collectively worth £1.82m, the second consecutive record average value.

But the buoyancy in demand doesn’t translate into landlords’ confidence, with landlord optimism continuing to dip, falling to 11% from 13% in the previous quarter.

This drop in landlord optimism is part of a long-term downward trend since a record high of 41% in Q1 2014. Recent tax changes, tighter legislation, higher stamp duty on second homes and continued Brexit uncertainty have contributed to landlords get feel increasing glum about the sector.

John Heron, director of mortgages at Paragon, commented: “A clearer picture is starting to emerge of the impact that multiple government and regulatory interventions are having on the PRS.

“In broad terms, landlords have been buying fewer properties and selling more at a time when there has been a resurgence in tenant demand. RICS reported a similar trend in their August residential survey and it is widely anticipated that this will lead to reduced choice and higher rents for tenants. This is probably not the outcome that policy makers were looking for.”

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24th September 2019