Research has revealed that more than one third of landlords in the buy-to-let market have disclosed that the demand for rentable properties, from tenants, is easing after a long period of high demand.
About 35% of landlords have said that the amount of renters looking for properties is now at its lowest since the second quarter of 2012.
That figure, however, is a national average, with buy-to-let demand still reported as high in London and the East of England.
The area with the lowest level of demand for rentable properties is Yorkshire and Humberside.
Despite the decrease in people looking for properties, landlords have stated to mortgage lender BM Solutions, who conducted the survey, that they believe that prospects in the private rented sector are still good.
Rent Demand Falls
This view is regardless of other findings in the study, that revealed that yields are falling as property prices increase. Also, rents that tenants are prepared to pay remain static.
The average gross ROI for the third quarter of this year was 6%, a drop of 0.1% from the previous quarter.
This is also a national average, with landlords in the North East reporting gross returns of 6.7% and landlords of Yorkshire and Humberside saying their gross yields are now 5.7%.
BM Solutions’ Head of Sales, Phil Rickards, says that despite these figures, an increasing number of landlords are now investing in buy-to-let properties. He believes that they see them as an excellent long-term investment.
Most landlords admit that they are entering this sector in attempt of boosting their pension funds, and investing in property is safer than putting their money into stocks and shares.
Mr Rickards explains: “There is confidence in the UK property market.”1
More than half of landlords, 53%, are also pushing up rents for new tenants with most claiming that they raise rents in a bid to match local prices, the survey found.
Voids are also a growing problem; after 36% of landlords said that their buy-to-let was empty during the last quarter.
The void rate has seen a slight increase of 3% compared with the second quarter. However, the average length of a void has decreased by five days, to 64 days.
The greatest number of voids has been reported by landlords in the North East, alongside the lowest occurrence stated by landlords in the South East.
There is good news, however, in regard to the number of landlords reporting that their tenants are in arrears, which has now fallen to its lowest in three years. The average amount of rent owed by tenants is now £1,532, down by £358.