Growing yields, low void periods and high tenant demand are signs of a healthy and well-performing rental market in the third quarter of 2015, the latest Paragon private rented sector (PRS) trends report states.
The survey reveals that average rental yields have grown to 6.4 per cent from 6.3 per cent over the last quarter and landlords are confident yields will remain stable in the next 12 months.
At the same time void periods are staying at a historical low of 2.6 weeks, while demand from tenants is growing. More than half of landlords said demand has been ‘stable’ and more than 40 per cent described demand as either ‘growing’ or ‘booming’.
The prospects for expected demand are also positive, with more than half of landlords expecting demand to increase over the next 12 months, compared to 42 per cent who expect it to remain stable.
The survey also shows an increase in young families with children moving into the PRS, and a corresponding decrease in young couples and professionals. Despite this, demand for longer-term rental agreements remains relatively low.
John Heron, director of mortgages at Paragon, commented:
“Our latest PRS Trends Survey data is indicative of a market growing steadily and sustainably over the long-term. With low void periods and steady tenant demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so.
“The data also reveals the changing demographic of those choosing to live in the PRS. This is reflected in the buying intentions of landlords which seem to be shifting slightly away from investing in multi-occupancy blocks, towards terraced housing – often more suited to young families.”
