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Buy to let market is booming, say landlords

1 July 2015

Buy to let market is booming, say landlords

Landlords are upbeat about the state of the buy to let market as demand from young renters and families continues to buoy the market.

Figures from mortgage lender Paragon showed tenant demand has improved for 43% of landlords.

The trend is forecast to grow over the next year with more than half of landlords (51%) believing they will continue to see a rise in demand.

The research found almost most buy to let homes go to young couples, young singles (43%) or families with children (42%).

The lender’s managing director John Heron said: “It is no surprise that rental demand is steadily increasing.

“With continued stress on the housing stock driving prices up, tough affordability hurdles for would-be buyers and a social rented sector under pressure as a result of renewed interest in right-to-buy, a steady increase in rental demand was practically inevitable.”

Meanwhile, another survey discovered the cost of renting a buy to let home is rising for tenants.

A study by loans and mortgages firm Ocean Finance found that 60% of tenants had to pay a rent increase when their rental agreement ended and that average rents shot up by more than £1,000 a year or £84 a month.

One in eight tenants also had to fork out an average fee of £117 to extend their tenancy.

The research revealed that more than half of tenants stay in a rented home for at least five years. The stability comes with a price of around £600 in letting agent fees for renewing tenancy agreements.

The firm’s Gareth Shilton said: “The buy-to-let market is booming at the moment, driven partly by the London market, although there are strong hotspots across the country.

“As demand for rented properties continues to outstrip supply, and many people struggle to get on to the housing ladder, landlords are in a strong position to continue to increase rents each time a tenancy agreement ends.

“On top of rental increases, tenants are facing rip-off fees from letting agents, not just to take new tenancy agreements, but also to roll-on an existing tenancy for another six or 12 months.”