Dorian Gonsalves, MD of Belvoir, one of the UK’s largest specialist residential lettings agencies, looks ahead to next year and is optimistic about the buy to let market.
“The impact of the Government’s Comprehensive Spending Review (CSR) will continue to impact on the private rental sector throughout 2011 and I believe that there will be a nationwide increase in rents throughout the year,” says Dorian.
Rental Market Trends in 2010
“This is supported by Belvoir’s own monthly rental index figures, which have shown a steady increase of 3-5% throughout 2010. The very latest Belvoir figures, from 140+ offices nationwide, reveals an average rent across the country of £703. This takes us back to April/May/June 2008 figures when the rental market was buoyant, but is still slightly down from the heights of September 2008 when average rents reached £711.The reasons for the increase in rents throughout 2010 was the continued national shortage of rental properties, combined with constantly increasing demand from tenants, which put upward pressure on rents.
“The exceptional economic conditions that we are currently experiencing are predicted to continue for the foreseeable future, and means that families are becoming poorer and may have to move further afield to find employment. Potential homeowners will continue to have difficulties obtaining mortgages and saving for a deposit. With an estimated 490,000 public sector job cuts planned, the residential sales market is bracing itself to face another dip. Families on lower incomes will have dramatic benefit reductions, including the end of a council house for life policy.
Attraction for Investment Landlords
“I think that all of these factors will result in investment landlords being attracted back to the buy to let market as they see better rental yields combined with lower purchases prices. There will also be the return of the accidental landlord who is unable or unwilling to sell their property and turns to the rental market as a viable alternative.
“If at some point during 2011 mortgage lenders decide to put their weight behind long-term investment landlords – and there is clearly a very high demand for this – then we will see a near perfect environment for the long-term property investor.
“I also predict that the Government will in the near future reconsider its position on minimum standards for lettings agents and this could comprise the introduction of mandatory client money protection for letting agents or a consumer redress system such as TPO Scheme, which is already mandatory for estate agents.”
