The latest BM Solutions buy-to-let quarterly index has found that 40% of landlords have witnessed a rise in tenant demand over the last three months.
The quarterly BM Solutions / BDRC Continental Landlord Panel found that tenant demand has increased over the last three quarters, with just 6% of landlords reporting seeing demand weakening to any extent.
Tenant demand remains high in Q2, with 40% of landlords reporting demand had increased (38% in Q1) and only a minority (6%) found tenant demand to have declined (8%).
Tenant demand remains particularly strong in the East of England, where 48% of landlords report an increase in demand in the last three months, and also in the South West (45%), and the South East (41%).The largest quarterly increase was seen in the North East (up 18 percentage points). At the other end of the scale, the West Midlands saw the largest drop in landlords reporting increased demand in the last quarter, with the number seeing an increase in tenant demand down eight percentage points on Q1 2015.
Tenant demand in the last 3 months:
| Property location | Tenant demand in Q1 2015 (Net increase) | Tenant demand in Q2 2015 (Net increase) | Quarterly change (% point change) |
| East of England | 48% | 48% | 0% |
| South West | 42% | 45% | 3% |
| South East | 45% | 41% | -4% |
| London (Outer) | 41% | 40% | -1% |
| North East | 21% | 39% | 18% |
| West Midlands | 45% | 37% | -8% |
| Wales | 23% | 36% | 13% |
| East Midlands | 34% | 35% | 1% |
| Yorks & Humber | 32% | 35% | 3% |
| London Central*** | 25% | 35% | 10% |
| Scotland | 29% | 30% | 1% |
| North West | 31% | 27% | -4% |
Confidence in the UKs financial market is as high as its ever been, with a net 37% reporting confidence in the outlook for the next three months. And, following a pre-election dip, landlords are now more optimistic for the prospects of the UK private rental sector, with 56% expressing confidence in the UK private rental sector compared to 53% in Q1 2015.
The incidence of rental voids and tenant arrears remains at an all time low, with just 29% of landlords experiencing a void period in Q2 (the same as in Q1) and a third (33%) over a third having faced tenant arrears in the past year (down from 35% in Q1).
Half of landlords report seeing rents increase in the areas where they let over the last 12 months (up from 46%) in Q1, with just 3% stating they have noticed rents falling (5% in Q1). After rising to 6.4% in Q4 2014, the average rental yield achieved fell to its lowest level for five years in Q1 (5.7%), but in Q2 this improved to 5.9%..
At a regional level landlords in the East Midland achieved the highest average rental yield of 7.0%, with those letting properties in Central London (5.0%) and Outer London 4.9% the lowest.
Average rental yields per region:
| Property location | % |
| Wales | 6.2 |
| North East | 6.4 |
| North West | 6.3 |
| West Midlands | 6.5 |
| South West | 5.9 |
| East of England | 5.9 |
| Yorks & Humber | 6.1 |
| South East | 5.8 |
| East Midlands | 6.5 |
| Scotland | 5.3 |
| London (Central) | 5.0 |
| London (Outer) | 4.9 |
Phil Rickards, head of BM Solutions, said: “There has been another small increase in tenant demand in the last quarter, and landlord activity in the market continues to increase as we move into the second half of the year.”
The average buy-to-let portfolio is now worth £1.1million, and generates a gross rental income of £51k a year. The average portfolio currently has 6.6 properties, which equates to a per property value of £170,600, generating an average of £7,700 in rental income. Portfolios in Outer London generate the highest gross rental income at £67,000, with Wales the lowest at £43,000.