Market making significant strides in recovery

The latest figures from the Council of Mortgage Lenders (CML) show that in April there was a 43% increase in the number of buy-to-let loans originated, compared with April 2013, and a 57% increase in the value of lending.

The latest survey results from Paragon show that landlords are feeling optimistic when it comes to the

prospects for the market and their rental portfolios. Those surveyed reported an increase in the average value of their rental portfolios, from £1.56 million in Q1 2014 to £1.60 million in Q2 2014.

The average annual void period has also fallen in the second quarter, from an average of 2.8 weeks in Q1 to 2.7 weeks. There is a clearly established downward trend in the average length of void period. Since 2011 void periods have remained consistently low, only fluctuating between 2.6 and 3.0 weeks. There are several factors that contribute to short void periods such as high tenant demand and good working relationships between landlords and letting agents.

Gross yields remained much the same in the second quarter with landlords reporting an average of 6.2%, which is not dissimilar to the levels seen throughout 2013. In the next 12 months landlords expect this average gross yield to remain stable.

In terms of property purchasing behaviour, 16% of landlords are planning to buy additional buy-to-let property in the third quarter, and of those looking to buy, more than half (54%) expect to buy terraced houses.

Source: PRS TRENDS report by Paragon Group