Landlords could see strong returns in 2012

25th January 2012

Conditions in the UK continue to be advantageous to people looking to invest in the private rented sector (PRS).

The latest figures from the Young Index have revealed that 19.1 per cent of existing landlords purchased additional property during 2011.

According to the group, the activity was said to be prompted by strong expectations for capital growth and income returns this year.

London was the area cited as the most likely to be financially lucrative for investors.

The Young Group stated that 85.1 per cent of landlords expected rents in the city to continue to rise throughout this year. Investments were deemed to be extra safe in the capital, as everybody polled believed that property prices would rise in 2012.

If landlords want to maximise these advantages, they may want to take out block insurance to ensure that they have the means to quickly repair and maintain their properties in the event of an accident.

This, in turn, would make them more likely to benefit from any capital appreciation which may be available as a result of wider market trends.

"Without a doubt, the appetite from private investors in the PRS for additional investments is extremely strong," said Neil Young, the chief executive of the organisation.

"The London rental market is particularly strong and demand from tenants seeking quality PRS accommodation shows no sign of abating, buoyed by a population that is spending longer than ever living in rented homes and increasingly living in solo households," he added.

Now could be the perfect time to invest, as many in the industry expect interest rates to remain low for the foreseeable future.

Data from the Young Index shows that three-fifths of landlords expect the Bank of England to keep the base rate at 0.5 per cent this year.

The Association of Residential Letting Agents recently stated that 2012 will be a challenging year for those in the PRS.

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