Many landlords expect tenant demand to rise in 2013

Two thirds of landlords (65%) anticipate demand for rental accommodation will rise further in the next twelve months, while just 3% expect demand to shrink, according to a recent poll.

The survey of 1,223 individuals by LSL Property Services found that in the past six months, 43% of landlords have seen tenant demand increase, while just 5% have seen demand decrease. Investors expect this growth to continue resulting in higher rental values.

Just 1% of property investors anticipate they will reduce rents in 2013 while 39% of respondents expect to increase their rents in the coming 12 months, with 10% anticipating rises greater than 5%.

Those landlords who expect to raise rents anticipate they will do so by an average of 4.6. Currently, average rents are rising at an annual rate of 3.4%, according to LSL’s latest Buy-to-Let Index.

David Brown, commercial director of LSL Property Services, said: “Fierce tenant competition in 2012 enabled many landlords to raise their asking prices when letting their properties, preventing inflation from eating into their rental income – and this is likely to continue in the next 12 months. Pension savers have been hit particularly hard by the Autumn Statement, and as rental incomes improve, buy-to-let looks increasingly attractive as an alternative long-term investment.”

With the underlying fundamentals behind long-term investment looking strong it should come as no surprise that 49% of landlords believe that now is a good time to invest in property while in sharp contrast, less than 1% think now is a good time to reduce their portfolio size.

Brown added: “Rising tenant demand has been at the heart of the recovery of the buy-to-let market, and will continue to be so. With lending to first-time buyers without substantial deposits historically subdued, and the number of UK households increasing, landlords expect demand for rental accommodation to swell further. Purchase prices are still down on their peak, and as rents rise annually, there are some attractive yields on the cards for new investors that do their homework before buying.”