Money News
Average rents have risen by 4% over the past quarter and 12% over 6 months to reach a new record of more than £1,000 per month (£12,041 annually), according to the latest Buy-to-Let Index from specialist lender Paragon.
Buoyant demand for rented homes is placing a strain on the stock of private rented sector accommodation, pushing rents higher. A third of landlords reported that tenant demand is expanding rapidly (the highest figure for almost 4 years); while a further 58% said it is 'strong and stable'.
With the Association of Residential Letting Agents predicting that tenant demand will continue to soar on the back of the credit crunch, this upward pressure on rents looks set to continue. Meanwhile, yields have remained stable at 6.3% for the third consecutive month.
John Heron, Paragon's director of mortgages, says: "The backdrop for buy-to-let remains positive across the country - potential residential purchasers are reluctant to buy in the current market or are unable to secure a mortgage and this is fuelling extra demand for rented accommodation."
Heron adds that the professional end of the market remains committed to buy-to-let over the long term. They typically hold their investments for a decade or more, are not intending to sell - despite the recent CGT changes - and are not experiencing pressure on their finances as a result of the credit crunch, given they borrow an average of less than 40% of the value of their portfolios.
02 May 2008 © Moneyextra.com
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