Paragon, the specialist buy to let mortgage people have published research showing that demand from potential tenants continues to be healthy. Nearly all the landlords who took part in Paragon’s latest PRS Trends research said they thought demand was stable or growing.
Landlords were asked about demand from tenants in the third quarter of the year and 91% said they thought that demand was stable or growing. The number who said they thought demand was on the way down was a mere 6%.
One of the key factors in making a decent financial return as a landlord is the importance of minimizing void periods. Experienced landlord insurance clients know how easy it is to make the mistake of working out your figures on the assumption that the property will be let out for 52 weeks a year. All too often there is a gap between tenants while the property is refurbished and advertised. This loss of income can make quite a hole in your annual yield. The Paragon survey makes reasonably encouraging reading for buy to let landlords because the average void period per year was 2.8 weeks. This was up slightly on the 2.7 weeks reported in the previous quarter but it is still reasonably low. Void periods have not exceeded three weeks since mid 2010.
Many landlords are confident enough to continue investing in this sector. The survey found that 16% are planning to buy more rental property. As far as rents are concerned 68% of landlords questioned said that their rental income had remained the same during the third quarter of 2012 while 27% said it had increased and 5% said it had gone down.
One of the big question marks for all landlord insurance clients is what will happen to property prices. Rental income is one thing but no one wants to be sitting on an investment that is going down in value.