A new report has shown landlords in the UK are confident about the rental market during 2014.
The latest LSL landlord sentiment survey has revealed a third believe rents will rise over one per cent during the coming months, with an average increase of 3.7 per cent predicted.
However, this is a 0.9 per cent decrease on predictions recorded in the last survey that was conducted in December 2012.
In the most recent LSL buy-to-let index, it was revealed that rents are currently rising at an average annual rate of 1.5 per cent.
According to those that expect to increase rents in 2014, 56 per cent say they will do so in order to cover the cost of inflation.
However, landlords might choose to increase prices due to the low supply of available property in the UK, narrowing the competition and making the market more fiercely contested.
David Newnes, director of LSL Property Services, said: “Even with an increase in rental properties available, demand in the private rental sector continues to outstrip supply in many areas, especially in London.”
LSL has suggested that the property market is a more stable investment than the volatile stock market, while also providing greater annuity yields than this particular option.
It was also suggested that total annual returns for landlords, when taking into account capital accumulation and the void period between tenants moving on, was 8.8 per cent in December, in comparison the 8.3 per cent in November.
“Rising rents are delivering strong yields to investors, making a powerful case for the rental market for those in search of a beneficial, long term investment. However buy to let investment is not a license to print money, and it requires the same level of research and planning as any other business investment,” Mr Newnes continued.
Landlords will also be pleased to hear that December 2013 saw annual growth in lettings activity, with a 7.7 per cent increase when compared to the previous year.
With high-street banks and building societies still offering low interest rates on savings schemes, many people are turning to income-generating assets like buy-to-let property as a way to make their money go further.
The market is particularly strong at the moment, with the demand for properties still much higher than the actual supply in the UK.
Despite recovery in the UK economy continuing, many residents are still being priced out of a mortgage. This means that the rental market is a more favourable option, especially for those looking for accommodation in large cities.
Mr Newnes also observed that UK landlords are witnessing falling void periods and this trend is expected to continue throughout the New Year.
“Landlords can minimise void periods by talking openly with their tenants about their future plans in order to prepare for when the property might be empty. Overall there’s an air of optimism surrounding the rental market now that inflation is firmly back on track as wage expectations start to improve. A rise in affluent tenants will help further boost the success of the private rental sector this year,” he added.