Many landlords share positive outlook for rental sector
A growing number of residential landlords in the United Kingdom share a positive outlook for the buy-to-let sector, with approximately one third predicting that rental rates will increase over the next several months. According to a survey conducted by Paragon Mortgages, 30 percent of respondents expect an upward trend when it comes to monthly rents from fall 2009 until late 2010. There does seem to be a basis for this type of optimism in the buy-to-let sector, with rental yields showing modest signs of increase, from 6.2 percent from January to March to 6.4 percent by the end of June.
Although substantiated hopes of rental increases is positive news for landlords who have struggled during the past 9 months of the recession, Paragon Mortgages cautions that those in the rental sector not become overly optimistic, as there are still some very significant challenges to face. Most problematic is the fact that fully 43 percent of landlords indicated that the lack of available buy-to-let loans is hindering their ability to grow their business, which in turn is slowing down more meaningful recovery in the sector. Jim Heron of Paragon Mortgages pointed out that many landlords have clearly suggested that they wish to expand their portfolios but are simply unable to do this due to the dearth of loans. Yet this would be an ideal time to purchase new properties, considering that real estate prices remain depressed through much of the UK, while rental yields are starting to increase.