A cultural shift towards renting property rather than buying looks set to continue into 2013 and beyond.
Economic performance
“How the economy performs affects the rental market in two ways,” adds CEO Dorian Gonsalves. “Key factors such as inflation, wages and unemployment impact on what tenants are able to afford. The country’s economic performance also has a major bearing on consumer confidence – and lower confidence means it is less likely that people will commit to long term purchase of property. This was evident in 2012. Inflation and wages
“This is another key factor which affects rental income for both tenants and landlords. From a tenant perspective, if wage growth is higher than inflation, they can afford to pay more. If it is lower, their disposable income is restricted so it is tougher for tenants to afford rent increases. Unemployment
“Despite the doom and gloom around the economy and debt, unemployment rates fell in 2012 and, according to the Office for National Statistics (ONS), are currently at 7.8%. “Forecasts for 2013 are mixed, with some suggesting that unemployment will continue to fall, while others predict a rise. The Centre for Economics and Business Research (CEBR) predicts that regional unemployment figures will vary, but are likely to rise across all regions between now and 2016, bar the South East, East and London.
“Any increase in unemployment in 2013 would be likely to increase the number of people that choose to rent, as buying a home won’t be the first thing on their mind.”
Belvoir Southsea adds,”As renting becomes more and more popular – especially amongst people under the age of 30, who are increasingly moving away from property purchase – we are moving into ‘Generation Rent’ – with both tenants and property investors and landlords coming out as winners.
” But now, more than ever, it is important to seek sound, professional advice and I would advise any investors that are considering increasing their BTL portfolio in 2013 to seek free specialist financial, tax and professional advice and guidance from our local Belvoir team.”
