Rental resilience: British landlords have never had it so good

Rental resilience: British landlords have never had it so good

The UK property market has seen something of a rapid change of fortunes in the last year. Following on from two years of increasing rental yields and real strength in the rental market, a number of factors came together in 2013 to create a situation where people were, at last, able to buy homes once again.

Mortgage affordability - aided by the Funding for Lending and Help to Buy schemes - meant that across the country more people were able to get a foot on the ladder, while the recovering economy and falling unemployment rates meant that demand for homes rose in the second half of the year in particular.

However, while many predicted that this would be bad news for the many landlords countrywide, the reality is actually very different - landlords have never had it so good. 

The drop in demand for rental homes never materialised throughout the year, and figures from BM Solutions showed that as a result, landlords were bringing in rental yields that remained consistent at 5.5 per cent throughout the second six months of 2013.

In reality, the fact that more people are getting onto the property ladder themselves does little to damage prospects of buy-to-let owners. 

New households are almost constantly being created in the UK, with graduates, people moving out of the family home and new couples all looking for places to live, and the average time spent in rented homes before these residents look to buy still sits at seven years according to Santander, giving landlords a rather consistent customer base.

Perhaps the most telling indicator of how strong the market has been for landlords, though, is that around void periods, and even more so in rental arrears.

BDRC Continental's latest study into the private rented sector showed that the majority of landlords across the nation experienced a drop in rental arrears in the fourth quarter of 2013. 

In fact, the volume of properties owing rent to owners now sits at a very low two out of every 11 properties. What this shows is that far from suffering from the rise in financial comfort Brits are experiencing - as many had predicted - landlords actually benefited, with more able to receive their rental payments than in the past. 

With regards to void periods, BDRC Continental added that the number of buy-to-let owners who had experienced one in the final quarter of the year sat at 34 per cent. 

This was a marked fall from the 36 per cent who had said the same just three months earlier in quarter three, giving an indication that there had been another uptick in demand during this period, even as a greater number of people were looking to capitalise on the bringing forward of Help to Buy phase two and buy their own property.

The average void period also saw a sizeable drop in the last three months of the year, settling on 59 days, down from the 64 days and 69 days that were recorded in the two respective quarters prior.

What this all shows, of course, is that far from being the victims of the rise in ability of Brits to get themselves on the property ladder, landlords rode the wave spectacularly, and came out of the other end in a better position than they were before. 

It all bodes well for 2014 and beyond, and with the National Landlords Association (NLA) stating that 27 per cent of landlords are looking to add to their rental portfolios in the next year, it's clear that those in the thick of it are feeling rather good about their position in the market at present.