CPS Homes

Increasing optimism from landlords - Paragon

Almost a quarter of landlords are feeling more optimistic about the prospects for their property portfolios, rental income and yields, buy-to-let mortgage specialist Paragon has revealed.

The Q2 Private Rented Sector Trends Report, which gives a detailed overview of the PRS sector and buy-to-let market, showed 23% of landlords feel more optimistic about the prospects for their portfolios. Optimism was particularly high among professional landlords, with 30% stating they were more optimistic, compared with 15% of smaller-scale landlords.

On average, landlords expect to have 13.1 residential properties in their portfolios in a year's time, compared with 12.6 properties currently. This is the first time in two years that landlords have predicted an increase.

Rental income is particularly healthy, with three out of ten landlords (29%) having increased their income during the second quarter, the majority of which reported an increase of between 2% and 4%.

Landlords are also more optimistic about the net value of their portfolios, with a growing proportion expecting an increase in value (14% Q2 vs 13% Q1), and fewer forecasting declining values (12% Q2 vs 19% Q1). The majority of landlords expect net values to remain the same.

Also highlighted in the report was an interesting shift in the types of property that landlords are looking to add to their portfolios during the third quarter. Of those looking to purchase, terraced houses are the most popular choice with more than half of landlords saying they expect to buy this type of property.

However, there have also been significant increases in the popularity of semi-detached houses (up from 28% to 41%) and detached (up from 9% to 22%).

Nigel Terrington, Paragon Group Chief Executive, said: "Our report emphasises the fact that there is significantly more optimism among landlords in the private rented sector and the buy-to-let market, and that looks likely to increase during the coming quarters."

Paragon's Q2 2011 PRS Trends Report - which covers the period from April 1 to June 30 - also shows:

- An improvement in the perception of the availability of buy-to-let finance - 22% said that it was reasonably available, compared with 17% in Q1;

Yields remain unchanged and healthy at an average of 6.2%;

Average weighted portfolio value stood at £1.42million;

Average gearing, the level of borrowing as a proportion of the portfolio's value, was 40% during the quarter.

Terrington said: "Landlords are still experiencing high levels of tenant demand which is set to rise further in the coming quarters. It is encouraging to see yields remaining at a healthy level, low void periods and general confidence across the sector.

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18 August 2011

The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.

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