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More landlords say tenant demand is growing

Some 29% of landlords say that tenant demand is growing or booming, the highest amount in almost a year and a reversal a substantial drop at the beginning of 2019, according to the latest trends report.

The report from Paragon also points out that it is the first time that the proportion of landlords saying tenant demand is growing or booming has increased in consecutive quarters since the end of 2017.

Portfolio landlords continue to drive an increase in portfolio size and value, with the overall average portfolio now at 13.2 properties and worth £1.82 million, the second consecutive, record average value.

However, the report reveals landlords continuing to take a cautious approach to their investments, with average gearing remaining historically low at 33% loan-to-value and mortgage payments as a proportion of rent unchanged in the third quarter of 2019 at 25%.

Despite more encouraging signs in portfolio size and value, landlord optimism remains historically low and now sits at 11%, down from 13% in the previous quarter.

This extends what is now a long term downward trend in optimism since the record high of 41%, recorded in the first quarter of 2014, shortly before the Government announced its plans to change the way landlords are taxed, increased stamp duty on second homes, and held the European Union referendum.

‘A clearer picture is starting to emerge of the impact that multiple Government and regulatory interventions are having on the private rented sector,’ said John Heron, director of mortgages at Paragon.

‘In broad terms, landlords have been buying fewer properties and selling more at a time when there has been a resurgence in tenant demand. It is widely anticipated that this will lead to reduced choice and higher rents for tenants. This is probably not the outcome that policy makers were looking for,’ he added.