Paragon - Buy to Let Survey Trends
Paragon Mortgages have published their second quarterly Buy to Let trends survey for 2003, key points include the following:
- On average, residential landlords' portfolios comprise 10.6 properties, up form 10.5 three months ago, and over the next 12 months they expect to see an 8.5% increase in the number of residential properties they own.
- The average gross rental rate of return earned by landlords on the market value of their residential property portfolios has fallen from 8.5% to 7.9% over the last three months whilst the average return net of running costs (excl. finance costs) has fallen from 6.2% to 5.7%.
- Residential landlords expect that gross rent receivable on their residential properties in 12 months time will be broadly similar to the current situation but expect to see an improvement in net returns.
- On average, over the last three months the market value of residential landlords' investment property portfolios has grown by 6.1% from £686,000 to £728,100 at the same time as the average gearing of these portfolios has fallen from 43% to 41%.
- On average, over the next 12 months, landlords expect their existing residential portfolios to increase in value by 3.1%.
- Landlords expect their overall net investment in residential property to increase by 5.8% over the next 12 months.
- The average period between tenants, during which a property remains unoccupied, is 2.9 weeks whilst the aggregate average void period per year stands at 2.8 weeks.
- Residential landlords believe that the general state of the Buy to Let market is currently stable although, in terms of their own Buy to Let Businesses, 28% consider these to be either growing or booming compared with just 5% who think their Buy to Let businesses are either declining or slumping.
- On average, landlords now have to show 3.6 prospective tenants round a property before it is let compared with 3.0 in February 2003.
- The changes which residential landlords would most like to see to make Buy to Let a better business for them are lower mortgage interest rates and more favourable treatment under Capital Gains Tax rules.