The latest Young Index report of Private Rented Sector (PRS) sentiment shows that 41.9% of landlords are considering purchasing additional residential property assets within London over the next 12 months, whilst a further 16.2% are looking at opportunities outside of the capital.
Neil Young, CEO of Private Rented Sector specialists, Young Group, who carry out the quarterly research comments: “Without a doubt, the appetite from private investors in the PRS for additional investments is extremely strong.
“The London rental market is particularly strong and demand from tenants seeking quality PRS accommodation shows no sign of abating, buoyed by a population that is spending longer than ever living in rented homes and increasingly living in solo households.”
The report also reveals that 19.1% of landlords added additional residential property assets to their portfolios during 2011, driven by strong positive expectations for both capital growth and income returns for the year ahead.
London clearly leads the way with 85.1% of respondents expecting rents in the capital to continue to rise throughout 2012 and a full 100% of landlords predict that property values in London will be at current levels or higher by the end of the year.
Interest rates are widely expected to remain low. 58.3% of landlords expect the Bank of England base rate to remain static throughout 2012. Of those who do see a rise on the horizon, their average prediction for Q4 2012 is less than half a percentage point higher than the current all time low of 0.5%, at 0.78%.
Undoubtedly, current low costs of finance represent a short term fillip but landlords clearly see the Private Rented Sector as a long term investment class. Data from Young Index Q4 2011 show that 36.9% of landlords intend to hold their property until 2031. The average future hold period across all respondents was 15.4 years.
Richard Gordon of UKPIS said: “This positive sentiment is a sign of continuing confidence in the UK housing market and the private rented sector in particular. Landlords and investors see property as a secure and stable environment against a background of financial uncertainty in almost all other areas. Where better to put your money than in housing?”