Prospective tenants are going to extraordinary lengths to secure homes, according to a letting agent.
Some are even drafting personalised CVs to show why they would make good tenants, claims Steven Ludlow, of Ludlow Thompson.
But problems of finding rented accommodation look set to ease following a dramatic rise in the number of mortgages approved for buy-to-let properties.
Earlier this year, when demand for rented homes significantly outstripped supply, one in 20 prospective tenants provided landlords with CVs, detailing employment and salary records, said Mr Ludlow.
He added: “Fierce competition in the rental market forces tenants to go to extraordinary lengths.”
But realising the investment potential of the market, more interest was shown in the buy-to-let sector during the third quarter of 2011.
The sector significantly increased its share of total mortgage advances between July and September as investors shunned equities and grew tired of low interest rates on cash savings.
Latest figures from the Council of Mortgage Lenders (CML) showed that a total of 34,500 buy-to-let mortgages were advanced in the third quarter of the year – up 16.2 per cent on the figure for quarter two and the highest number of buy-to-let advances since the final quarter of 2008.
The value of buy-to-let lending also rose, by 18.8 per cent quarter-on-quarter, to £3.8bn.
Some commentators, however, say the trend won’t be sustained.
Paul Diggle, at Capital Economics, says: “While this trend probably has further to run, we don’t think lending to the sector can escape signs of renewed economic weakness unscathed.
“The recovery in the buy-to-let sector means that, at 10.7 per cent, buy-to-let’s share of total mortgage advances by value is at its highest level in three years. As a share of the outstanding stock of mortgages, buy-to-let hit a new peak of 12.6 per cent in value in the third quarter.”
Thanks to a blend of rising rents, cheap mortgages and very short void periods between tenants, the number of landlords in financial trouble is remarkably low.
Latest data also shows a small improvement in the number of buy-to-let borrowers at least three months in arrears – while the share of repossessions held steady at a three-year low of 0.08 per cent.
But Diggle is not throwing his hat in the air.
“The outlook for buy-to-let lending is difficult to read. On the one hand, with credit conditions in the owner-occupier mortgage market still tight, there is unlikely to be an easing in tenant demand anytime soon.
“That should support the number of buy-to-let advances.
“However, we find it hard to believe landlords are immune from the signs of renewed weakness in the housing market and the wider economy.
“Already, sentiment about the rental value outlook has softened, and our forecast for falling house prices means total returns to landlords should be negative in 2012.
“On balance, the pace of growth in buy-to-let advances should slow from here.”
As demand for rental properties outstrips supply and the average length of tenure hits a record high, experienced landlords may also be playing a canny game, by investing in cheaper areas of the country.
The Circle, a new scheme in Swindon, promises gross rental yields in the region of 6.8 per cent, with demand for a scheme not far from the town centre and close to major road and rail links expected to be strong.
Philip Reeve, director at local agents Philip Andrews, says: “There is no doubt Swindon is enjoying a buoyant rental market.
“With major employers, including Nationwide BS, Honda and Intel, all on Swindon’s doorstep, The Circle is in an ideal location to attract tenants and a significant number of investors have already purchased at the development.
“In most cases, we have been able to secure the purchaser a professional tenant able to move in within a day or two of completion, avoiding any void periods.
“As would-be buyers struggle to take that first step on to the ladder, investors are perfectly placed to benefit from the high demand for rental property.
With the CML confirming buy-to-let lending is rising, landlords look set to cash in on the boom in rents.”