Rents rise as prospective buyers choose to wait

17 June 2003
People putting off buying their first home in the face of escalating housing prices have boosted rents during May, according to new figures.

The survey by specialist lender Paragon Mortgages shows that average annual rental incomes among buy -to-let landlords rose by 2.15 per cent on the previous month to £8,930.

Annual rate yields remained at 7.98 per cent of a properties price as the average value of investment landlord's property rose by 2.1 per cent to £111,972 during May.

The highest yields for landlords were seen in areas in the north and Yorkshire, where property is cheaper. In the north, yields of 10.64 per cent were seen on properties with an average value of £52,639, while in Yorkshire yields averaged 10.28 per cent on properties valued at £67,106.

In Greater London landlords saw yields of just 6.76 per cent on properties valued at £207,568 and in the South East yields averaged 7.36 per cent on properties worth £133,946.

John Heron, managing director of Paragon Mortgages, commented, 'Buy-to-let is looking steady as tenant demand builds and landlords continue to invest.'

'This is good news for landlords, but also for the large number of prospective tenants who will benefit from more choice and quality in rented accommodation.

'The rental market is awash with people in their 20s and 30s who are delaying their first home purchase and going the rental route.'

The number of first-time buyers has slumped to a new low as the high property prices force young people to delay buying a property.

National Association of Estate Agents figures showed that in May the percentage of sales agreed by first time buyer sales fell to 14 per cent, down from 18 per cent in April.

This is the lowest level since the NAEA first polled its members on this question in 2001.

Melfyn Williams, President of the NAEA, explained, 'Clearly the present absence of first time buyers suggests that many homes are unaffordable for most young prospective buyers.

'However, reports from our members suggest that the young are not staying at home with their parents, but are choosing to rent instead. The lettings side of many estate agents businesses has been booming this year.'