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Accidental landlords are getting serious, says Rightmove

Rental price growth is likely to slow this year, with supply set to grow as private landlords – dubbed a ‘rag-tag army’ – invest more.

The rag-tag label is from Rightmove, which says that new landlords are entering the market and existing ones investing to expand their portfolios. It compares them with more strategic institutional investors.

It says that even ‘accidental’ landlords are getting serious, with one in eight expecting to buy an additional investment property this year, completing the transformation from ‘credit crunch casualty’ to active buy-to-let investor.

The proportion of ‘virgin landlords’ looking to invest for the first time is at its highest level for more than a year, while 74% of existing landlords are set to make further investments.

All, says Rightmove, are tempted by sustained tenant demand and an attractive return on investment, expecting gross yields of around 5%.

Miles Shipside, director of Rightmove, said: “Buy-to-let investors will provide much-needed supply relief to ‘generation rent’. A marketplace where landlords are achieving satisfactory returns will relieve some of the supply pressure, although the task seems to be falling on the comparatively rag-tag army of private landlords rather than more strategic institutional investment.”

Rightmove says that while the pool of landlords is growing, it is changing in composition. It says that a feature of the rental market over the last few years has been the rise of the accidental landlords – someone who ends up letting a property out as a result of a moribund sales market, rather than through design.

Rightmove says its latest research indicates that such landlords are keen to leave their amateur status behind and invest further. Rightmove’s research says that accidental landlords make up around 30% of all private landlords.

Just 16% of accidental landlords, says the site, say they want to sell the property just as soon as they can.

Shipside said: “Though not landlords by design, many of those accidentally thrust into the landlord arena have not only survived but thrived in many instances. From being one of the major casualties of the post-credit crunch market, some accidental landlords are now major beneficiaries.”

He added: “While the cavalry charge from major institutions seeking to invest in the private rented sector has so far failed to materialise, private landlords, whether accidental, virgin or professional, are perhaps enjoying the respite and seizing the opportunities that come with having the battlefield to themselves.”

The Rightmove survey, conducted in the first two weeks of January, drew 10,008 responses.

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