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Strong tenant demand continues to fuel buy-to-let
1 July 2008 10:30
Landlords feel demand for rental properties is rising, according to a new survey – a belief that is helping to sustain buy-to-let lending at this difficult time for the mortgage market.
Recent figures from Paragon revealed that rental yields reached 6.4 per cent in May, up from 6.1 per cent a year previously, while average annual rental incomes were up by 11.7 per cent year-on-year at £11,952.
Now a new poll by the lender has found that more than half of all landlords expect the strong tenant demand fuelling these rises to keep growing over the next year, up from less than two fifths in November, whereas just one in 20 think that it will wane.
Paragon's managing director John Heron said that this was indicative of the counter-cyclical nature of buy-to-let, as potential homebuyers choose to rent instead because they feel wary of the current property market or simply cannot get a mortgage.
Perhaps this helps to explain why the volume of buy-to-let mortgages advanced in the first quarter was only down by only eight per cent year-on-year at 74,800, according to Council of Mortgage Lenders' data, while the value of this lending stayed steady at £9.8 billon.
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