The property management service Belvoir Lettings has predicted that even more people will choose to rent in 2014, increasing demand for rental properties. Rising house prices will encourage people who might have contemplated buying their own property this year to look alternatively at rentals. With more people looking to rent property in the private sector, it is no wonder that buy-to-let landlords should feel optimistic about the year ahead and plan to expand their portfolios.
Rising rental income
Although Belvoir reports that in 2013 rental incomes in some regions rose only by 1 to 2%, which was determined by levels of unemployment and general economic conditions, this is not deterring existing or new landlords. Indeed, the letting agent is noticing more first time landlords making enquiries, owing to the continuing low interest rates and poor returns on other forms of investment. With growing demand for rental properties of a high standard, largely from tenants aged 35 to 44 who make up the fastest growing sector of the private rental market, modest rent increases can be expected over the course of 2014. After average rents increased to a high of £757 across England and Wales in September 2013, this year is set to be promising for landlords given predictions. However, even if rent rises are not significant, the trend for tenants to seek longer letting periods, particularly among those who take good care of the property they rent, can itself be profitable, as void periods and the costs of damages are avoided.
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Increased buy-to-let lending
It has been promised that lending for buy-to-let mortgages will rise by 25% over the year, with a total of £25billion available during 2014. While this is similar to the level of lending available to landlords a decade ago and the private rental sector has grown by 80% over the same time period, this is good news for landlords starting out or those who are looking to increase the size of their portfolio. A survey by Paragon Mortgages of close to 200 private landlords revealed that 20% indeed expect to buy property in the first three months of 2014; though portfolio expansion is more popular with landlords who already let out a larger number of properties. With house prices set to rise this year, a third of landlords expect the value of their portfolio to grow over the course of 2014. This is good news for existing landlords, including those who accidentally became landlords in recent years when they were unable to sell their homes. However, new investors or even landlords looking to expand their property collection may struggle to find such good deals this year.