More landlords say tenant demand is growing
The proportion of landlords who believe tenant demand is growing or booming has increased to the highest level in almost a year, according to Paragon's latest PRS Trends Report for the third quarter of 2019.
At 29%, the proportion of landlords saying tenant demand is growing or booming reverses a substantial drop in the first quarter of 2019 (21%) and returns the indicator to the same level it's roughly maintained since the second quarter of 2017 (average 30%).
The report also marks the first time that the proportion of landlords saying tenant demand is growing or booming has increased in consecutive quarters since the fourth quarter of 2017.
Elsewhere in the report, portfolio landlords continue to drive an increase in portfolio size and value, with the overall average portfolio now at 13.2 properties and worth £1.82 million – the second consecutive, record average value.
However, the report reveals landlords continuing to take a cautious approach to their investments, with average gearing remaining historically low at 33% loan-to-value and mortgage payments as a proportion of rent unchanged in the third quarter of 2019 at 25%.
Despite more encouraging signs in portfolio size and value in third quarter of 2019, landlord optimism remains historically low and now sits at 11%, down from 13% in the previous quarter. This extends what is now a long-term downward trend in optimism since the record high of 41%, recorded in the first quarter of 2014, shortly before the government announced its plans to change the way landlords are taxed, increased stamp duty on second homes, and held the EU Referendum.
"A clearer picture is starting to emerge of the impact that multiple Government and regulatory interventions are having on the private rented sector," said John Heron, director of mortgages at Paragon.
"In broad terms, landlords have been buying fewer properties and selling more at a time when there has been a resurgence in tenant demand. It is widely anticipated that this will lead to reduced choice and higher rents for tenants. This is probably not the outcome that policy makers were looking for," he added.