Sustained growth recorded in the UK’s PRS

Sustained growth recorded in the UK’s PRS

Average yields for investors in the UK’s private rented sector have continued to grow over the last three months.

Summary:

  • Investors in the UK’s private rented sector are currently enjoying average yields of 6.3%
  • 58% of landlords also state that fewer than one in 10 tenants in the sector ask for long term tenancies
  • Over half of the UK is expected to be renting in the private rented sector, rather than owning property, by 2025

The continued demand for rental property in the UK is growing returns for investors in the private rented sector (PRS).

In the last three months average yields have grown to 6.4%, according to the findings of Paragon Mortgages’ PRS trends report for Q3 2015. The current growth has also been met with positive sentiment among landlords regarding further yield increases going forward, with most respondents believing that yields will maintain current growth levels over the next 12 months.

One of the report’s most significant findings was regarding the length of time tenants are looking to stay in a property. Following news in July that demand for short term lets is on the rise, 58% of respondents in this report stated that less than one in 10 tenants are seeking longer tenancies.

In addition, it was also found that void periods have remained at historically low levels, with the average length of time between tenancies now just under 2.6 weeks.

Commenting on the findings John Heron, Director of Paragon Mortgages, said: “Our latest PRS Trends Survey data is indicative of a market growing steadily and sustainably over the long-term. With low void periods and steady tenant demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so.”

Britain’s changing attitudes towards home ownership recently led to the forecast that more than half of people under the age of 40 in the UK will be renting their property rather than owning it by 2025.

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