A property supply shortage that has plagued the rental sector in recent years looks set to ease this year as more private landlords prepare to invest in the buy-to-let sector, according to Rightmove’s first Rental Market Forecast of 2013.
It predicts that an increase in first-time landlords is likely to have a ‘cooling effect’ on rental price growth, to the relief of beleaguered tenants.
Rental price growth is predicted to slow in 2013 as one in eight ‘accidental’ landlords, owner occupiers who let a property as a result of circumstance, expect to buy an additional investment property this year, offering more competition in the market.
Accidental landlords make up around 30 per cent of all private landlords, according to Rightmove’s research and are largely seen as a casualty of the credit-crunch.
The research finds that 74 per cent of professional landlords intend to expand their portfolios in 2013.
Miles Shipside, director and housing market analyst at Rightmove comments: “Buy-to-let investors, attracted by evidence of sustained demand and strong yields, will provide much needed supply relief to ‘Generation Rent’.
“A marketplace where landlords are achieving satisfactory returns will relieve some of the supply pressure in 2013, though the task seems to be falling on the comparatively rag-tag army of private landlords rather than more strategic institutional investment.”
“Though not landlords by design, many of those accidentally thrust into the landlord arena have not only survived but thrived in many instances. From being one of the major casualties of the post-credit crunch market, some accidental landlords are now major beneficiaries. They provide a fascinating insight into the structural shift we have seen in the private rented sector over the past few years.
“The growth in rental demand and appeal of the buy-to-let sector to lenders has helped turn a chance encounter with the rental market into a further and valuable source of fresh supply to satisfy the needs of those trapped by ‘Generation Rent’.”
Landlords are attracted to invest by a combination of sustained demand and attractive yields. The
proportion of ‘trapped renters’ – those tenants who state they would like to buy but can’t afford
to – remains stubbornly high at 53 per cent.
They are joined by a growing proportion of tenants who state that they are not interested in buying as renting suits them. This group now stands at one in six (16 per cent), the highest level ever recorded by Rightmove.
In addition, those tenants who expect to stay in rented accommodation for three years or more has jumped from 32 per cent in last quarter’s survey to 37 per cent this quarter.
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