Surge in demand for rental property expected

Posted: 30 Jun 2008 13:50:43 GMT

As first-time buyers struggle to get on the housing ladder and homeowners get cold feet about investing, landlords believe there will be a surge in demand for rental property.

As first-time buyers struggle to get on the housing ladder and homeowners get cold feet about investing, landlords believe there will be a surge in demand for rental property.

Buy-to-let specialists Paragon Mortages surveyed more than 200 landlords and over half predicted there would be increased tenant demand over the coming 12 months.

John Heron, Paragon Mortgages managing director, explained the phenomenon: "We have consistently said that buy-to-let has strong counter-cyclical qualities and we are now seeing concrete evidence of this. Potential home buyers are postponing purchasing decisions because they either feel uneasy about the current market or they simply can't get a mortgage, so they are renting."

The evidence supports the theory that demand for rental property will increase. Paragon's Buy-to-Let Index showed that rental yields in May hit their highest level since February 2006.

Mr Heron has predicted that demand will also come from students, immigrants and those that choose to "rent as a lifestyle choice".

Paragon Mortgages believe that the private rented sector will help to support the current housing shortage.

Last week, the National Housing Federation (NHF) suggested that housing associations should take second-hand homes from struggling developers to help combat the problem.

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