Paragon Mortgages released its latest report on the state of the rental market earlier this week. It was very positive, but then Paragon only seems to do bullish reports.

“With strong rental demand landlords are able to raise rents to cover their increased mortgage repayments. Rents rose by an average of 3.04 per cent over the past three months – an annualised growth rate of 12.7 per cent,” said Paragon.

Paragon added “yields have remained stable at around the 6 per cent mark for over a year – although when landlords’ gearing is taken into account the rental return is much higher. The average landlord property value rose 1 per cent during the month to £181,533, while annual total returns, including capital gains plus rental income, stood at 11.6 per cent – the highest level since April.”

And then, Paragon’s chief executive Nigel Terrington engaged in an impressive piece of twisted logic, “As owner occupiers are increasingly struggling under the weight of higher borrowing costs, buy-to-let landlords can provide accommodation for the growing number of young people who want a flexible lifestyle or who aren’t yet ready to step on the property ladder.”

It’s twisted logic, because actually, the real reason why people are renting, is because they can’t afford to buy, and the reason why house prices keep rising, when for most would-be first time buyers they are completely unaffordable, is due to the buy-to-let sector propping up demand.
Copyright 1996-2007 Find.co.uk Limited. All rights reserved

© Investment & Business News 2013