Assetz® News - Relentless rent rise roars on

Relentless rent rise roars on

21st December 2007 |

With the end of the year drawing close, analysts will be able to look back on a 2007 of two distinct phrases. Up to July, the housing market continued to boom, talk of a housing market slowdown appeared as risible as it had turned out to be in 2006 and first-time buyers sought mortgages of ever-increasing loan-to-value rates.

Then, of course, came the peak of interest rates at 5.75 per cent in July, a level which did not rise further as some had anticipated but remained until this month, followed by the financial tsunami of the credit crunch sweeping around the world from the epicentre of the subprime earthquake in the US.

With affordability still low and credit suddenly so much harder to obtain, the housing market has seen a sudden shift from high inflation to very low inflation, so much so that lenders such as Nationwide and HSBC have forecast nil growth in 2008. Expectations that this slowdown would badly hit buy-to-let landlords, however, have been anything but the case. It may have spelt bad news for short-term speculators who bought hoping for prices to go on soaring, but the long-term landlord who seeks a good rental income has enjoyed the silver lining to this particular cloud.

There has been enough evidence recently that rents have been going up as a result of increasing demand from those opting not to risk a foray into the housing market. The recent Paragon buy-to-let index was the latest of several such surveys, indicating a rise in rents of six per cent in the last quarter and 17 per cent over the last year.

What has also emerged is that demand is aiding landlords in another way. Quite apart from the increased level of income when a tenant is in situ, evidence has emerged that the time spent without anyone paying the rent is getting shorter.

This has come from the Mortgage Trust, whose latest survey quizzed 140 landlords and found that three in every ten take an average of just a week to find a new tenant when one moves out. A further 40 per cent took just two weeks to fill a vacancy. A measure of how much this has reflected an increased demand for rental property is the fact that the average time to fill vacant properties is now 13 days, compared with a previous quarter average of 16.

Renting is not, of course, always a cheap option. A survey of Facebook users by Tenancy Deposit Solutions has found a third of them borrow from their parents to help raise the deposit. But these figures all indicate that the demand for rental accommodation is on the way up for the same supply and demand reasons as the house price boom up until autumn this year.

This is a point which suggests the market could continue to offer good prospects for landlords looking to maintain or expand their portfolios, as a recent Bradford & Bingley survey showed 86 per cent of them are intending to do. For those looking to rent out property, 2008 appears to be a year of promise.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3935.html. Alternatively, please see our full press release archive.