Nearly half of landlords say rent levels rising

Landlords are enjoying rental growth at its highest-ever level.

This is according to Paragon Mortgages, whose survey of buy-to-let investors revealed that 46 per cent believe that achievable rent levels have increased in the last six months and a further 51 per cent say that the levels are stable.

Average rental incomes have increased by 8.2 per cent over the last quarter and 1.6 per cent over the last month, fuelled by a rising tenant demand, the report states.

The firm said that increased rents are expected to lead to better returns, with landlords predicting that net returns will grow from 4.3 per cent to 4.5 per cent in the next year.

Paragon forecasts that with interest rates expected to rise this year, people are likely to wait until borrowing becomes more affordable before they buy a home, pushing tenant demand further.

"The economic environment as well as rising divorce rates, inward migration and an expanding student population, mean that an increasing number of people require rented accommodation, and this is driving rents up," commented managing director of Paragon Mortgages John Heron.

The Association of Residential Letting Agents recently reported that tenants are staying in rented property for an average of 17 months, with a quarter staying more than two years.

Landlord Mortgages “Rising interest rates coupled with rising house prices will make it very difficult to arrange 90% Buy To Let Mortgages. For the short term Buy To Let Landlords will have to dig deeper or arrange high priced Buy To Let Mortgages with low rental yield requirement.”

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