Buy-to-let scare stories are unfounded says Paragon after demand for rented accommodation has remained strong for the last six months
Demand from tenants for rented homes has continued to place upward pressure on rents, and the average annual rent in England and Wales in May stood at £10,702 – an increase of £1,037 or 10 per cent on November’s figure of £9,665.
Nigel Terrington, chief executive of Paragon, commented: “The private rented sector is buoyant as demand from tenants continues to be strong. Many parts of the community, such as students, migrants, people on housing benefit, and first jobbers, rely on rented accommodation for their housing needs, and the sector is set to continue this growth over the next five to ten years.”
In a recent survey by Paragon, 63 per cent of residential property investors reported that tenant demand was either stable or growing and that they were responding by growing their buy-to-let portfolios.
“Commentators forecasting a downturn in the buy-to-let market have overlooked the fundamental dynamic of the UK housing market - people need somewhere to live, and for many house purchase is simply not an option,” continued Terrington.
“Although buy-to-let demand is strong across the UK, choosing the right property in the right area is key. Professional landlords know that returns vary according to different property types and that the property must match the requirements of the tenants in that area. The modest terraced property in towns and cities up and down the country has typically represented a good long-term investment proposition. Our data shows that terraced homes consistently generate above average yields, better than other property types.”
Rental yields have been stable at 6 per cent for the past year, despite rising house prices, providing further evidence that demand for buy-to-let is well underpinned.
Terrington concluded: “Pundits may indulge in scare stories about buy-to-let, but that won’t change the fact that many millions of people rely on the private rented sector for a roof over their heads. Like it or not, buy-to-let is here to stay and has a rosy future.”
