Young Index Private Rented Sector Landlord Sentiment Survey

LONDON - Aug. 5, 2013 - PRLog -- PRESS INFORMATION
August 2013

Young Index Private Rented Sector Landlord Sentiment Survey

Young Index is a quarterly gauge of market sentiment within the Private Rented Sector that polls Young Group’s client base of over 1000 active investors and landlords who hold UK residential investment property.

Our Q2 2013 report found that London continues to lead the way for Private Rented Sector investment appetite, capital value outlook and future income expectation.

Download the full report:

http://www.younggroup.co.uk/downloads/YoungIndexQ22013.pdf

APPETITE TO INVEST IN THE PRS

Just 13.1% of respondents said they expect to add assets outside of London to their Private Rented Sector (PRS) property portfolio. This is continues the downward trend of the past 12 months.

However, half (50%) of the investors we questioned said that they were considering purchasing additional PRS assets in London over the coming 12 months.

OTHER INVESTMENTS

There is a strong positive sentiment for PRS assets, irrespective of where they are located. Of those questioned only 4% stated that they were considering selling PRS assets:

2% were considering selling property assets for cash, most likely looking to take advantage of buoyant house prices.

2% would reinvest the proceeds from the sale in stocks and ‘alternative investments’.

CAPITAL VALUES

Over the past 12 months, respondents’ expectations of the capital value movements of London based property have remained buoyant and there is positive sentiment for residential property values.

A full 100% of respondents predict that capital values will remain at their current levels or increase further.

There was a marked leap in positive sentiment for property outside of London too, with 84% of respondents expecting capital values to increase.

This is more than double that of a year ago (41.3%) and shows that there is belief that the returning strength of the UK housing market will continue into 2014.

RENTAL OUTLOOK

The number of investors predicting that rents will continue to increase across London has remained constant. This quarter, 96% of investors expect London rents to rise over the coming 12 months. This figure is on par with the results from our Q2 2012 Young Index in which 98.3% of respondents predicted that rents would continue to rise.

Sentiment for the rental market in the rest of the UK has continued to strengthen. 84% of investors expect rental income to remain buoyant, a 6% increase on Q2 2012.

COMMITMENT TO THE PRS

Investors continue to remain committed to reaping the benefits of long term investment in the Private Rented Sector.  30.7% of investors are intending to hold their properties for at least the next 20 years and 57.7% for at least the next 10 years.

For the second year the average future hold period has increased to 15.8 years. When combined with the average period landlords have currently held property for, the average life span of a property holding is 24 years.

ECONOMIC OUTLOOK

61.5% of respondents expect that, for the next 12 months, the Bank of England Base Rate will remain static at 0.5%. In Q2 2012 65.5% of landlords expected the base rate to remain static. This shows that there is a small increase in the number of landlords preparing for an increase in the Base Rate.

The average Base Rate expectation for Q2 2014 is 0.69%. When compared to the data from 12 months ago (0.57%) we can see that, on average, landlords believe the base rate will increase by greater amount than they did in 2012.

FINANCE

When it comes to mortgages there are signs of increased activity, 16.6% of respondents review their mortgage at least every 6 months while the majority of respondents (58.3%) review their mortgage every year.

38.1% of the investors questioned had refinanced a property within the last 18 months with 9.5% of them having done so within the last 3 months. The largest cohort of investors (40%) have a Loan To Value (LTV) of 75% while the average LTV is 67%.

REASONS FOR INVESTMENT

When asked about returns from investing in the PRS, the results showed that rental income (13.6%) was less important than capital growth (45.5%), highlighting the fact that landlords are investing in the PRS as part of a long term plan.

When asked about their reasons for investing in the PRS the top two reasons were that it outperformed other asset classes (32%) and as part of pension planning (36%).

REGULATION

64.3% of respondents believe there is currently adequate regulation of the Private Rented Sector. 14.3% believe landlords should be regulated while 35.7% believe that agents need greater regulation.  

Download: http://www.younggroup.co.uk/downloads/YoungIndexQ22013.pdf

-ends-

About Young Group: (www.younggroup.co.uk)

Young Group has been shaping the Private Rented Sector (PRS) since 2003 through research, finance, investment and asset management.  Our clients range from private individuals to corporates, institutional investors, developers and Housing Associations.

Our Private Rented Sector consulting advice spans all aspects of the PRS from strategic, operational considerations through to the day-to-day asset management of PRS holdings.  

Day-to-day asset management of Private Rented Sector investment assets is delivered through Young London, our lettings and management business.  Young London has won multiple awards from The Times, The Sunday Times, HSBC and Bloomberg for its quality of service.

We provide consultancy and advisory services to those currently invested in the PRS and to those considering investing in the asset class.

Contact:

Michael Oakes

Director of Communications, Young Group

T: 020 7593 3300

E: moakes@younggroup.co.uk

W: www.younggroup.co.uk / www.younglondon.co.uk