Paragon’s latest buy-to-let index reveals that buoyant demand for rented homes is placing a strain on the stock of private rented sector accommodation, creating upward pressure on rents.
A third of landlords report that tenant demand is expanding rapidly while 58 per cent say it is stable.
Yields have remained at 6.3 per cent for the third consecutive month as annual rents rose from £11,886 in February to £12,041 in March.
Paragon director of mortgages John Heron says: “The backdrop for buy to let remains positive across the country – potential residential purchasers are reluctant to buy in the current market or are unable to secure a mortgage, fuelling extra demand for rented accommodation. The professional end of the market remains committed to buy to let over the long term, typically holding investments for a decade or more.
“These investors do not intend to sell following the capital gains tax changes and as they borrow an average of less than 40 per cent of the value of their portfolios, are not experiencing pressure on their finances as a result of the credit crunch.”