Rightmove: Rents to fall in 2013 but landlords will still invest

Monday, 04 February 2013 01:17

Rightmove expects rental yields to fall slightly in 2013 but still expects the majority of landlords to expand their portfolios.

Its first Rental Market Forecast of 2013 shows that the lack of supply that has plagued the rental market in recent years is set to drop, meaning tenants will not see rents rise as much as they have done in recent years.

Miles Shipside, director and housing market analyst at Rightmove comments: “Buy-to-let investors, attracted by evidence of sustained demand and strong yields, will provide much needed supply relief to ‘Generation Rent’.”

Rightmove said that average rental yields will fall to 5.7 per cent in the UK in 2013 despite no drop in demand from tenants who will still find it hard to save up for a deposit to buy a property.

Its report says that the difficulty in getting a mortgage, rising house prices and an increase in the number of “accidental landlords” will cause a small drop in rental yields.

It says that 12 per cent of “accidental” landlords plan to expand their property portfolio in 2013 and the proportion of new landlords looking to invest for the first time is at the highest level for more than a year.

Overall, 74 per cent of professional landlords plan to expand their portfolios in 2013.

The rise of the “accidental” landlord is as a result of circumstances that mean a property owner may have a reason to sell, but because of the stagnation in house prices is opting to rent their property for the time being in the hope that the market will pick up.

Rightmove’s report suggests that many of these people are now considering expanding their involvement in the buy-to-let market. 68 per cent said they intend to hold onto their rental property with just 16 per cent saying they want to sell it as soon as possible.

Landlords will be encouraged to invest by the fact that 53 per cent of tenants remain “trapped”, unable to get their foot on the property ladder and 16 per cent of tenants, a new high, expect to continue renting for the foreseeable future.

Shipside comments: “Though not landlords by design, many of those accidentally thrust into the landlord arena have not only survived but thrived in many instances. From being one of the major casualties of the post-credit crunch market, some accidental landlords are now major beneficiaries.”


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