Landlords are expecting rent rises to slow over the next twelve months to below the target rate of inflation.
According to a sentiment survey of more than 1,100 landlords conducted by Your Move and Reeds Rains, landlords estimate that rents will increase by 1.8 per cent in the next twelve months.
This is lower than the Bank of England’s 2 per cent target rate for inflation, and well below 2.4 per cent annual rate of rent growth seen over the last year.
Only four in ten landlords (43 per cent) expect to raise rents in the next year. Of this group, 57 per cent cite covering the cost of inflation as their main motivation, while 31 per cent say they will do so to pay for maintenance work.
Tenant demand fuels number of available homes to let
Over the last six months, 41 per cent of landlords report seeing a rise in tenant demand. This comes as lettings activity has been growing, with new tenancies agreed across England and Wales up by 6.9 per cent compared to August 2013.
Tenant demand has helped reduce average void periods in the private rented sector, ensuring greater stability of income for landlords.
In the past year, 18 per cent of landlords have already added to their portfolio of rental properties, and one fifth of landlords (21 per cent) think now’s a good time to invest in buy-to-let.
Of this group, 55 per cent cited tenant demand as a key motivation for investment. Attractive property prices are the second biggest driver, reported by 54 per cent of landlords, while 45 per cent pointed to better capital returns on offer compared to other forms of investment.
Only 5 per cent of landlords currently anticipate a fall in demand for rental properties over the coming years.
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