Landlords’ confidence in buy-to-let has been bolstered by strong tenant demand – but concerns are growing about the difficulty in raising mortgages and their costs.
Exactly half of landlords who have recently attempted to raise mortgage finance think it is more difficult to secure than a year ago, while only 11% believe it is now easier to obtain mortgage finance.
The cost of finance also remains an issue, with 45% of landlords who have recently taken out a mortgage reporting that monthly payments are more expensive than 12 months ago.
Despite these difficulties, nearly half (48%) of the 1,464 landlords polled earlier this month by LSL believe that now is a good time to invest in property, while less than 1% think it is now a good time to reduce their portfolios.
Four-fifths of landlords (82%) who think now is a good time to buy rental property cited attractive property prices, while 53% mentioned strong tenant demand.
David Newnes, director of LSL, said: “House prices are still subdued in many parts of the country and tenant demand is still growing. This is presenting landlords with the opportunity to secure strong yields on properties, and boosting confidence in buy-to-let as a long-term investment.”
The strength of tenant demand has been the key driving force behind recent rent rises, with LSL’s latest Buy-to-Let Index showing rents at a record high of £725 in England and Wales in July.
In the past six months, 44% of landlords have seen a rise in tenant demand, while just 1% have seen a decrease in demand. Investors expect this growth to continue. Two-thirds of landlords (64%) anticipate demand will increase further in the next 12 months.
Four in ten landlords expect to increase rents over the next year, with just one in a hundred investors expecting they will reduce rents. Those expecting to raise rents anticipate they will do so by an average of 4.5%.