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Rental growth expected to slow down this year
2:00pm Thursday 7th February 2013
The upward pressure on private rents is predicted to cool down this year.
It will be helped by large numbers of “accidental” landlords who have developed a taste for renting out their homes, a property website says.
One in eight (12 per cent) of “accidental” landlords, many of whom originally took on tenants because of difficulties selling their house in the tough economy, said that they now plan to buy another property specifically as an investment this year, Rightmove found.
Three-quarters (74 per cent) of professional landlords also said they intend to expand their portfolios in 2013, giving a further boost to the available rental housing stock.
Miles Shipside, director of Rightmove, said: “Overall supply of greater rental property coming on tap is good news for tenants as it is likely to lessen the pace of rental growth in 2013.”
The website estimates that about three in ten landlords are “accidental”.
Encouraged by good rental returns, some 68 per cent of them said that they intend to hold on to their current rental property and have no particular plans to sell.
Mr Shipside said: “Many of those accidentally thrust into the landlord arena have not only survived but thrived in many instances.
“The growth in rental demand and appeal of the buy-to-let sector to lenders has helped turn a chance encounter with the rental market into a further and valuable source of fresh supply.”
A lack of choice for private tenants has been one of the driving forces behind strong rent increases in recent months.
People have remained in the rental sector for longer as many would-be first-time buyers have struggled to raise the typical 20 per cent deposit needed to buy a home.
This has created more demand in the sector, which has pushed rents up higher, making it even harder for tenants to save for a mortgage deposit.
Research from housing charity Shelter last week found that annual private rents have risen by almost £300 year-on-year on average across England and in some areas they have increased by thousands of pounds.
Shelter has called for more Government action to release families from the “rent trap” which is holding them back from owning their own homes.
Rightmove said that its own research found that the share of renters who would like to buy a home but are trapped remains “stubbornly high” at 53 per cent.
However, one in six (16 per cent) of tenants said that they are not interested in buying and they prefer to rent. More than a third (37 per cent) of tenants expect to stay in rented accommodation for three years or more.
Mr Shipside said: “A marketplace where landlords are achieving satisfactory returns will relieve some of the supply pressure in 2013, though the task seems to be falling on the comparatively rag-tag army of private landlords rather than more strategic institutional investment.”
More than 10,000 people took part in Rightmove's research last month.