Ian Potter, ARLA Operations Manager said: “In many parts of the country our members are seeing an unprecedented level of demand for rental homes. However, although the rental market is highly competitive, it is still possible to find that ideal home – if the search is carried out in a thorough, well-informed and realistic manner.”

71% of landlords who replied to the survey are positive about the prospects for the buy-to-let market, with only 5% feeling negative. This percentage of optimists is very slightly down from the 72% recorded in November 2011, but 4% up on last summer’s survey.

The majority of landlords are happy with the size of their portfolio with 59% planning to sit tight, although 31% intend to acquire more investment properties in the next 12 months. This compares to 35% who were intending to expand in November 2011 and 33% in August 2011.

In terms of actual property purchases and adding to portfolios in the last 12 months, 17% of respondents said they had bought property, 5% had sold, while 73% of landlords had conducted no transactions.

41% of landlords thought ongoing tenant demand for private rental properties had improved in the past six months, while 54% felt it was the same. Overall landlords appear to be confident of a healthy and stable rental market at present, CHL said.

66% of landlords rate their buy-to-let investment portfolio as a stable, resilient concern, while 28% have their eye on the Bank of England MPC and lenders’ own interest rate movements stating their portfolio may be vulnerable to any potential increases in rates.

“Our landlord survey used to be an annual occurrence, but the buy-to-let market is developing at such a rate that we have started conducting more regular polls of CHL landlord borrowers in order to gauge the current mood,” said Bob Young, managing director of CHL Mortgages.

“This latest iteration shows the vast majority of landlords remaining optimistic about the buy-to-let market’s prospects for the second half of 2012 and beyond, and still regarding the private rental sector as a safe place for their investment.

“Just under a third of current landlords intend to supplement their existing portfolios with further property acquisitions and this figure is likely to be complemented by new entrants and the usual smattering of accidental landlords, meaning the buy-to-let market is likely to remain in good health for the foreseeable future.

“A number of landlords are happy to sit tight and play the waiting game however and this could be down to a number of factors including the level of deposit now required to access finance, potential concerns about future interest rate rises and the fact many lenders are still finding it difficult to access funding lines and have less appetite to lend than historically.”

Young (pictured) added: “All in all, the buy-to-let market is a positive place to be at present and while landlords are not immune to wider economic uncertainty, they are confident in existing and future tenant demand, and where appropriate, and given the right finance arrangements, will be seeking to add to their portfolios.”

The survey found that 31% of landlords are looking to expand their range of properties with just 10% of respondents aiming to downsize their portfolio this year. 59% said they were happy with their current holdings.

Double dip could delay investors expansion plans

Solid yields attract buy-to-let investors

Brokers predict a strong BTL market for 2012

The percentage of investors looking to expand has remained steady since last year, with 17% of respondents stating they have already added to their portfolio in the past 12 months.

Overall, 71% of investors in the buy-to-let market are optimistic about the outlook for 2012, with 66% rating their properties in this sector as a resilient concern. However, 28% claimed their portfolio may be vulnerable to potential rate increases.

CHL Mortgages’ managing director Bob Young said that the results show landlords remain positive about the market.

“Just under a third of current landlords intend to supplement their existing portfolios with further property acquisitions and this figure is likely to be complemented by new entrants and the usual smattering of accidental landlords, meaning the buy-to-let market is likely to remain in good health for the foreseeable future.

“A number of landlords are happy to sit tight and play the waiting game however and this could be down to a number of factors including the level of deposit now required to access finance, potential concerns about future interest rate rises and the fact many lenders are still finding it difficult to access funding lines and have less appetite to lend than historically.

“All in all, the buy-to-let market is a positive place to be at present and while landlords are not immune to wider economic uncertainty, they are confident in existing and future tenant demand, and where appropriate, and given the right finance arrangements, will be seeking to add to their portfolios.”

The buy-to-let sector continues to increase its share of the mortgage market, with buy-to-let mortgages at an estimated 12.8% of the total value of outstanding mortgages at Q1.

The total number of buy-to-let mortgages stands at just over 1.4m with a total value of £159.4bn.

The average maximum loan-to-value for buy-to-let mortgages in Q1 was 75% with minimum rental cover at 125%, which has held steady for three years.

Arrears on BTL at 1.7% remain lower than the owner-occupied sector at 2%. Repossession levels at 0.12% were higher than residential at 0.8% as lenders practice less forbearance with struggling BTL investors.

CML director general Paul Smee (pictured) said: “Even though buy-to-let lending is running at only around a third of its peak levels, the sector is continuing its gradual expansion. It has become an important part of the overall landscape of housing provision in the UK.”

Meanwhile, the CML said it could revise down its 45,000 arrears projection later this summer as overall arrears figures improved slightly. In Q1, the number of mortgages with arrears of 2.5% or more of the balance fell to 157,800, or 1.4% of all loans.

Borrowers 10% or more behind on the total balance on their mortgages are the only tier to have risen, if only by 300 against 2011 figures.

However, continuing pressures on household finances, changes to welfare benefits, and an upward drift in mortgage rates all have the potential to disrupt the current stable picture, said the CML.

Mark Blackwell, managing director of xit2, the property and mortgage data specialist, said: “Repossessions orders flowing through our systems in April fell 12.5% from the Q1 average, suggesting lenders are becoming even more tolerant of borrowers in long-term arrears – at least for the time being. But they can’t go on doing it forever.”

Banks funding costs are increasing and their balance sheets are being stretched, so there will come a point where lenders will reassess, said Blackwell.

“With the economy stalling, and the crisis in the eurozone worsening, that point may well come later in the year. We could see swathes of borrowers in long term arrears pushed over the edge once lenders turn off the forbearance packages that are acting as life support machines for borrower finances,” he said.

Repossessions by second-charge mortgage providers fell by 19.5% in Q1 2012 against Q1 2011, in other figures.

The Finance & Leasing Association (FLA), the trade body for the second-charge mortgage market said its members repossessed 157 properties in Q1.

Orchard Property Services

Strong demand for rental properties increased further last year, with the average monthly rent climbing to £716 in 2011 from £682 in 2010 as a result.

BM Solutions reported that while 2011 rental yields were marginally lower than the previous year (6.2%), they remained buoyed by continued rental increases across the UK. Regionally, the highest rental yields in 2011 were in the North (7.0%), North West, Yorkshire and the Humber (both 6.3%), Wales (6.0%), West Midlands and the East Midlands (both 5.9%). Greater London (4.8%), South West (5.0%), South East (5.2%) and East Anglia (5.3%) all registered yields below the UK average.

Phil Rickards of BM Solutions said: “There is a very healthy demand for rental properties across the UK right now, which in part may be driven by the costs associated with buying a home: costs which, for some, will only increase as the stamp duty holiday comes to an end. Average gross yields on a buy-to-let property have been just over six per cent for the past two years, driven by growth in rental values.

“However, with house prices likely to remain broadly flat again this year, buy-to-let landlords can again expect little capital gain on their investment in 2012.”

While the national average monthly rent increased by 4.8% overall, there are more significant gains in regional areas. The largest increases were in East Anglia (8.0%) and the North (6.9%). The South East and Greater London recorded rises of 5.8% and 5.6% respectively. In contrast, rents increased by less than 1% in Wales (0.1%) and Scotland (0.7%).

The average rent in Greater London remains significantly higher than elsewhere in the UK, at £1,212 per month. The average monthly rent in the capital is 69% higher than UK average of £716 and 41% above that in the South East (£858) – the next highest region. The lowest average rents are in Wales (£474 per month), the North and Yorkshire and the Humber (both £488 per month).

However, rental arrears hit a high of 10.7%, reflecting the poor economic backdrop.

For or against: Buy to let’s growth divides the masses

Buy to let: delivering the goods or failing landlords?

Platform ring-fences £600m for buy to let in 2012

MS Poll result: 56% identify abuse of bridging and buy to let

Annual rental inflation increased to 4.3% from 4% in December, a £30 rise in the average monthly rent in the past year, according to figures from LSL Property Services.

Rents rose the fastest on a monthly basis in the West Midlands and South West, where they increased by 1.8% and 1.5% respectively.

In London, rents rose by 0.8%, where they have only fallen once in the past 13 months. However, rents fell in four regions, with the biggest declines in the East of England and Wales, where they fell by 1.7% and 1.5% respectively.

London recorded the highest annual rental rises at 6.3%, followed by the East of England where rents rose by 5.9%, but fell in the North East by 0.7%

David Brown, commercial director of LSL Property Services, said the depth of the underlying demand for tenancies over Christmas brought greater competition for rental property and halted the usual downward pressure on rents.

“In January, activity has already moved up a gear in many parts of the UK, pushing rents up once more in a small, but significant rise,” said Brown.

“Mortgage lending has shown signs of improving in recent months, but transactions remain at almost half their historic levels, and the increasing dependency on rental accommodation will drive further rent rises over the long-term.”

Over 275,000 new tenants registered for private rental accommodation in 2011, a 24 percent increase on 2010, according to Countrywide, the lettings agent and property services Group.

The findings follow an extensive survey taken among Countrywide’s network of more than 300 branches to track key market trends among some of the industry’s biggest property brands, such as Hamptons International, Bridgfords, Slater Hogg & Howison, Taylors, Dixons and Fulfords.

Nearly 80,000 new tenants registered with Countrywide agents during Q3 2011, with August generating the highest number of enquiries since Countrywide records began. Overall, London saw the biggest spike in enquiries, with a 35 percent increase in tenant applications recorded over the course of the year.

Annual increase in new tenants registering for rental accommodation

- London: Year on year percentage increase: 35%

- North: 22%

- Scotland: 22%

- South: 21%

Total 24%

The Group’s quarterly research into the private rental sector also confirmed that the demand is causing a growing number of rental properties to be let before they are even advertised. Those properties that do make it to market took an average of 13.6 days to be let/occupied in 2011 , a reduction of 1.2 days compared to the 2010 average.

Average number of days properties are let within

- London
2010: 15.1
2011: 12.2

- North
2010: 15.7
2011: 14.7

- Scotland
2010: 18.3
2011: 18.7

- South
2010: 14.1
2011: 13.0

Total
2010: 14.8
2011: 13.6

The findings also reveal that whilst cohabiting couples under the age of 35 continue to make up the largest proportion of new tenants looking to rent (at 23.4% in Q4 2011), a growing number of families are entering the private rental market, an emerging trend which was found to be most evident in the North and South East of the UK.

The report also found that in Q4 2011, 53.1% of new landlords were either investing in buy-to-let property for the first time or investors with small portfolios . As investment in the UK buy-to-let market has grown over the course of the year with investors looking to invest their cash in property, whilst taking advantage of the competitive BTL mortgage rates on offer.

Nick Dunning, Commercial Director at Countrywide said:

“We are in the midst of a rental boom as renting has become the new norm. Despite gradual improvements in property levels, it is not enough to satisfy the ever-increasing levels of demand.

“With a record number of tenants entering the private rental sector, there is a vast shortage of properties available in all areas of UK, which could potentially fuel a steady rise in rent prices throughout 2012.”

Also, operating the UK’s largest mortgage broker, with over 650 mortgage consultants across the country, Countrywide has seen a marked increase in the availability of competitively priced buy-to-let mortgages during the previous six months, which has helped to make property investment an increasingly attractive option for professional landlords who manage small portfolios.

In 2011, the volume of activity in the buy-to-let market looks set to have increased by 20% year on year with lending to have risen above £12bn.

Commenting on the increase in buy-to-let lending, Nigel Stockton, Countrywide Financial Services Director said:

“Whilst buy-to-let lending has grown, it is still only at 30% of the total lending that were seeing at the peak of the market.

“In November’s housing strategy, the government announced some measures to tackle the problem of empty homes; with over 720,000 empty properties in the UK.

“We welcome any Government support to encourage investment and the transfer of these properties to the buy-to-let sector in order to alleviate the current supply and demand imbalance.”

Research from the Association of Residential Letting Agents, shows the number of landlords that sold a property in the last 12 months increased from 6% to 8% in Q4 2011.

The number of landlords saying they had bought properties also rose, from 23% to 25% over the same period.

These figures suggest that landlords focused on reshaping their property portfolios during the year. Landlords in the North West of England were particularly active, with 31% of respondents buying at least one property during the year, and 11% sold at least one.

In contrast the number saying they expect to acquire further properties in the next 12 months dropped slightly, from 27% to 25%, while the number saying they expect to sell rose from 8% to 9%.

Landlords have been steadily decreasing the percentage they are borrowing on each property. This could reflect the continuing lack of mortgage finance or be a reflection of the drop in property prices in some parts of the country.

The current average loan-to-value of 46% represents the lowest seen since Q2 2007, when landlords reported an average of 60%.

Tim Hyatt, President of ARLA said:

“PRS forecasts have stated that the rental sector will still offer growth in the coming year – probably of four to five per cent according to Liam Bailey of Knight Frank.

“Rental growth will remain robust across all sectors, albeit at a more sustainable level of around 4% to 5% for this year.

“This will come about in part because of the continued inactivity in the sales market but nothing like the growth we have seen for the past two years. But the PRS still represents substantial value for investors looking to enter the market or increase their participation.”

Ian Potter, ARLA Operations Manager, said:

“These statistics indicate that landlords changed their property portfolios throughout last year, in some cases expanding portfolios despite gloomy economic climate.

“However, our research also suggests that into 2012 this situation might change, which could be a sign for concern. A healthy PRS is crucial in providing choice and flexibility for consumers across the housing market in 2012 and, ultimately, helping to provide more homes for more people.

“We would urge anyone planning to let out additional properties, or a property for the first time, to do plenty of research and consult with experts – it is vital to ensure your investment is properly protected.

“Using a regulated ARLA agent will mean you have access to Client Money Protection and a redress scheme, as well as advice on selecting the right property at the right price.”

56% of the landlords who took part in Paragon’s quarterly survey said that they expect tenant demand to either grow or boom in the New Year, which compares to 45% who were asked the same question at the end of 2010. Only 6% of those questioned thought that tenant demand would decline in 2012.

When asked whether they thought rental income would increase during the next 12 months, 45% of landlords surveyed said that levels will increase, whereas 53% said that it would remain stable – only 2% said that it would decrease.

Over the coming year, two thirds of landlords said that they thought arrears levels would stay stable and 20% said that they thought arrears would rise moderately.

Nigel Terrington (pictured), chief executive of Paragon Group, said: “It is no surprise that landlords are expecting a healthy level of tenant demand in the New Year, based on the levels of demand we have seen steadily increase throughout the past 12 months.

“2011 was certainly a good year for the buy-to-let market, with not only increasing tenant demand but landlords investing in their portfolios, low levels of arrears and more available finance.

“With the success of 2011 to build on, I believe the private rented sector will continue to perform and provide a valuable tenure choice for even more people in 2012.

“This year will bring its own challenges, especially with the uncertainty in Europe and the wider financial markets affecting overall confidence levels. But I believe that the foundations that we laid as a sector in 2011 will allow lenders and landlords to continue to do business, in particular if we see a greater level of product innovation. We should look to 2012 with optimism as it is sure to bring further opportunities.”