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Insight & Opinion

Rental property portfolio expansion on the horizon in 2014

Author: Gemma

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A significant proportion of landlords are looking to expand their rental portfolios in the coming 12 months, new research reveals.

Data from the latest BM Solutions / BDRC Continental Landlord Panel shows that a third of landlords are eyeing expansion, in spite of the fact that the perceived increase in tenant demand is currently at its lowest level for three years.

Whereas 52 per cent of landlords were reporting an increase in tenant demand at the end of 2011, this dropped to 35 per cent in Q4 2013, though a much greater proportion are reporting ‘no change’ in demand, with stability further reinforced in the market’s profitability profile.

According to the research, 80 per cent of landlords are making a profitable full time living from letting, with 76 per cent of amateur landlords able to supplement their regular earnings with profits from their portfolios, which is providing them with a return beyond breaking even.

At the moment, the average amount owed by tenants in arrears has fallen to a three-year low of £1,499, which is good news, according to Phil Rickards, head of BM Solutions.

“While there will always be elements of the rental market that fluctuate, overall stability will continue to ensure that lettings attract both professional and amateur landlords,” he explained

“By increasing portfolios, landlords are also able to further spread the risk of void periods and tenants in arrears, which is important when considering the long-term investment rather than focusing on the short-term gains.”

The research also highlighted that although confidence in the buy to let sector has fallen slightly from the six-year high reported last quarter, an impressive 63 per cent of landlords are still confident in their prospects for the future, with optimism around capital gains and the broader economy also continuing to increase.

Furthermore, there has been a two per cent decrease in the number of landlords reporting at least one void period over the past three months, with the average void duration falling by five days to 59 days since the previous quarter.

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