The increased level of demand is creating an upward pressure on rents according to Paragon, the UKs leading specialist buy-to-let lender.
In this positive environment, investors expect to grow the size of their portfolios over the next year by 5 per cent, from 11.5 to 12.1 properties, according to Paragons latest survey of landlords. In value terms, they expect the average portfolio to be worth £1.5 million in 12 months time.
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The Royal Institution of Chartered Surveyors (RICS) have confirmed that rents are growing at record levels, with surveyors expecting particularly strong tenant demand into the autumn as first-time buyers delay property purchase.
Nearly a third more chartered surveyors reported a rise in tenant lettings with 20 per cent more landlord instructions compared with 8 per cent in the previous quarter.
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This view is confirmed by the Association of Residential Letting Agents (ARLA), whose quarterly survey of letting agents revealed that tenant demand outstrips supply in all areas of the rental market, with a knock-on effect on achievable rent levels, which have risen in all parts of the country.
Paragons latest Buy-to-Let Index showed average rents rising at an annualised rate of 12.7 per cent, to reach £10,914.
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Nigel Terrington, chief executive of Paragon, said: There is broad agreement that buy-to-let is a beneficiary of a softer housing market, as would-be homebuyers defer house purchase and find themselves competing with migrants, students and first jobbers, among others, for a finite supply of rented homes. The private rented sector continues to expand steadily to meet this growth in demand for accommodation and landlords add to their portfolios in the knowledge that tenant demand is buoyant and rents continue to rise.
