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Tenancy demand starting to fall away, say more landlords
More than one in three landlords say that tenancy demand has peaked, with the number of voids slightly up.
In research conducted for specialist lender BM Solutions, 35% of landlords have seen demand plateau. Landlords also experienced more void periods, with 36% reporting a void in the last three months. This was 3% up on the previous quarter. The average void was shorter by five days, however, to stand at 64 days.
Landlords said that the difficulty in finding good replacement tenants was the most common reason for voids. The research showed that the average tenant stays in the same property for two and a half years.
Tenant demand is highest in the East of England and London, while landlords report lowest interest in Yorkshire and Humberside.
The average rental yield across the UK fell slightly in the last quarter to 6%. The North-East was the strongest performing area with an average return of 6.7% while Yorkshire and Humberside had the lowest yields at 5.7%.
Despite tenancy demand tailing off, 68% of buy-to-let landlords say they are confident about their prospects and also increasingly optimistic about the wider economy.
The survey, regularly conducted by BM Solutions and BDRC, also shows that a significant proportion of landlords (43%) are using rental income to support their monthly expenditure. This is a 3% rise on the second quarter of this year.
A further third of landlords say they entered the private rental sector as a means to prepare their finances for retirement and 75% of the whole sample say they regard property as their pension. Over one third agreed that property investment offers a better return than shares as a long-term investment.
Phil Rickards, head of sales at BM Solutions, said: “The squeeze on spending does mean that we’re seeing more landlords using their rental income to supplement the cost of living.
“However, confidence in the UK property market is leading to more people entering the market, importantly seeing it at as long-term investment rather than focusing on the short term.”
