Q2 Shows Continued Growth for PRS
Tenant arrears have fallen in the second quarter this year by a drop of 3.5% from the previous quarter according to data from the NLA, (National Landlords Association). As the decrease in rent arrears is welcome news for landlords, it may herald the calm before the storm, as it is yet undecided how LHA benefit cuts will affect the private rented sector next April when they will take effect.
As tenant demand soars with data showing an increase in 50,000 new tenants in the first 2 quarters of the year, rent increases in the next two quarters are more than probable.
Buy-to-let lending appears to be letting the side down as banks are still dragging their heels with constrained austerity although some growth is evident in the first half of the year as new landlords enter the industry. The 13% increase in BLT mortgages in the second quarter represents a gain of 2,900 new mortgages compared to the first quarter of the year and up 3,400 on the second quarter of 2009.
Director General of the CML, Michael Coogan said, “Finance for private landlords, whether institutional, is crucial if the UK is to have enough homes to meet the needs of the population. Funding conditions for lenders remain tight, but there is every reason to expect the buy-to-let sector to continue to make a powerful contribution to helping meet the country’s varied housing needs.”
In light of tenant demand and unavailable housing stock, rents are also expected to continue to rise throughout the year, with yields increasing in this sector. Current statistics and data suggests a total £149bn is outstanding on BTL lending representing 12% overall gross mortgage total both consumer and BTL.
Services accompanying the private rented sector including letting agents and landlord legal services are experiencing record growths, with investment in PRS services increasing. Profitable returns on regional franchise opportunities supporting landlords are expected to continue to rise in response to the current trends.
By
Madalena Penny