Investor activity to fuel growth in London’s new homes market in 2012

With research showing that more landlords are actively looking to add to their property portfolios in the coming months, Lee Watts, managing director of Kinleigh Folkard & Hayward estate agents, believes that housebuilders will increase the supply of new build homes in London next year in order to cater for greater demand in the sales market.

He said: "We will see further demand in the sales market with an increased supply of stock for lettings due to high rental yields and increasing levels of buy-to-let funding made available by lenders. This will lead to growth and activity within the new homes market with developers confident in developing the land banks they have been building up over the past few years."

The latest research by Paragon Mortgages shows that more landlords are feeling increasingly positive about the prospects for the private rented sector (PRS) in 2012 and are seeking to buy more properties with a view to letting them out.

More than a fifth - 22% - of the landlords that took part in the survey said that they expect to purchase additional properties in the next 12 months. The average portfolio size in second quarter of 2011 was 12, which has climbed to 13 in the third quarter.

Watts added: "I predict the lettings market will experience a healthy volume of business throughout 2012 with an increase in longer term renting due to property values and mortgage availability making homeownership difficult for first time buyers to achieve."

When asked about their current portfolio the most popular property type that landlords'owned were terraced houses, with 65% of landlords owning at least one. This was followed by 58% of landlords owning a flat, 48% a semi-detached house and 24% a House of Multiple Occupancy (HMO).

The research also highlighted that landlords are more positive about being a landlord, with 77% agreeing to this statement and 57% rating the prospects for the PRS in the next 12 months as very good or good.

John Heron, Paragon Mortgages managing director, said: "This is an interesting time for the PRS as landlords are experiencing very high levels of tenant demand as other areas of the housing market come under increasing strain.

"Looking at the year ahead, I am pleased to see that landlords are expecting to add to their portfolios as there is no sign that tenant demand is going to slow in 2012 and to ensure the PRS can withstand further demand, there needs to be increasing investment in PRS stock."