Tenant demand outstripping supply
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Tenant demand is outstripping supply by almost three times, says Paragon Mortgages.
Paragon Mortgages’ PRS Trends Report reveals nearly three times as many landlords reported tenant demand was rising rather than falling during the second quarter of the year.
The quarterly snapshot of the private rented sector and buy-to-let market shows that 29% of landlords recorded growing levels of tenant demand during the period, compared to 10% who say it is falling.
In the first quarter 24% of landlords reported growing tenant demand and 8% reported falling levels of demand.
Tenant demand was stable at 54% for the majority of landlords during the second quarter but 7% say they are unsure which direction demand was heading.
Over a third of landlords (35%) expect demand to be higher a year’s time with just 8% forecasting a decline.
Nigel Terrington, chief executive of Paragon Group, says: “Tenant demand has been rising consistently for two years and shows no signs of slowing down. Would-be home buyers continue to be unwilling or unable to step onto the property ladder, whilst longer-term social changes, such as greater numbers of single person households and economic migrants, are also creating more demand for rented property.
“Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios.”
The report also showed one in five landlords intend to purchase during the third quarter, up from 12% who said they wanted to purchase in the second quarter.
With mortgage finance remaining constrained landlords add that a wider availability of tax incentives and sustained tenant demand would encourage further investment.
Terrington adds that confidence is high but there is a dislocation between landlords’ desire to purchase and their ability to do so.
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