The UK buy-to-let market is thriving, bringing positive news for landlords as properties are in high demand among tenants. 

According to Richard Rowntree, managing director for mortgages at Paragon Bank, there is a pressing need for more homes to cater to the growing demand from tenants across the country.

Paragon Bank's recent landlord survey revealed an all-time high of 67% of respondents experiencing increased tenant demand in the first quarter of the year, surpassing the previous record of 65% in 2022. Nearly half of the landlords described the surge in tenant interest as "significant," indicating the tremendous popularity of UK buy-to-let properties. This response rate represents the highest figure recorded since 2011 when data compilation began by BVA BDRC.

As tenant demand outpaces supply, rental prices have naturally seen an upswing.

 Rental costs have reached record highs in many parts of the UK, as acknowledged by 85% of the surveyed landlords. Over half of them (52%) plan to raise rents across their portfolios in the next six months, with an average increase of 8.2%.

The rental price surge can be attributed to various factors beyond increased demand. Landlords face a more challenging environment, grappling with higher mortgage costs and increased expenses for repairs and maintenance. Consequently, some landlords are passing on these additional costs to tenants.

The Paragon survey also sheds light on regional variations in demand for UK buy-to-let properties. 

For instance, the east of England witnessed an increase in tenant demand reported by around 90% of landlords, whereas the figure stood at 73% for the West Midlands. The south-west, Wales, the West Midlands, and the south-east all experienced high levels of demand, with 94%, 92%, 92%, and 91% of respondents, respectively, describing the demand for their properties as strong or very strong.

While the high demand for UK buy-to-let properties is undoubtedly advantageous for landlords, as it makes it easier to find tenants, it presents challenges for tenants themselves. Richard Rowntree emphasizes the need for more private rented sector homes, striking a balance between driving up standards and providing tenant protection without hindering investment. Failing to address this issue could lead to further rental inflation and heightened competition for rented homes, at a time when affordable housing is of utmost importance.

Richard Rowntree, managing director for Mortgages at Paragon Bank, affirms, "The fact that we've seen another high in the proportion of landlords who have told us that they've experienced an increase in tenant demand reinforces what I've said previously; put simply, we need more private rented sector homes, not less. An important element of this is a policy that strikes the right balance between driving up standards and providing tenants with protection while not acting as a barrier to investment. Failure to address this will further drive rental inflation and increase competition for rented homes at a time when affordable housing is as important as ever."

About the author 

Daniel Latto

Property Sourcing Training | Portoflio Property Investor | iTunes Podcast host.

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