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Landlords cash in

22nd May 2008 | back to article listings BACK    print this article PRINT

Much doom and gloom has already been written about the credit crunch and its effects on the UK property market - but how do these predictions apply to the buy-to-let sector?

Not very well, it would seem. Even in a property downturn, evidence suggests that landlords are weathering the storm and even profiting from the changing landscape of supply and demand. The BBC recently reported that investors in many areas of the UK have been able to raise rents over the past several months, due to increased demand. Now, new figures from the Royal Institution of Chartered Surveyors (Rics) make it clear that there are benefits to be reaped during a property downturn.

According to the Rics data, over the past three months, tenant demand for residential property grew at its quickest pace since July 2007 - with interest split between both apartments and houses. A total of 28 per cent more chartered surveyors reported an increase rather than a decrease in lettings during this period, compared with 17 per cent in the previous quarter.

Rics said this trend could be clearly traced back to the effects of the credit crunch, as mortgage lenders have been tightening their criteria and cutting product offerings.

"The sales market's loss is the lettings market's gain. Some would be sellers are retreating from selling [and are instead] letting or re-letting their properties," commented Rics spokesperson James Scott-Lee. Meanwhile, the percentage of chartered surveyors reporting a rise in gross yields leapt from five to 23 per cent. Perhaps it was this factor that contributed to a rise in confidence regarding long-term property investment, with the proportion of landlords choosing to sell their properties when tenant leases finished declining from 4.6 per cent to 4.2 per cent over the past three months.

This research is not the only boost that the buy-to-let market has received in recent days. Yesterday, the Department for Communities and Local Government committee released a report proposing that 50,000 further rented homes need to be built to help fill Britain's housing shortage. According to the Supply of Rented Housing report, measures should be put in place to help property investors avoid long void periods, as well as to help promote buy-to-let investment to those who have not yet entered the sector.

And it seems that buy-to-let landlords have been taking all of these indicators to heart when deciding whether to buy, sell or hold tight. A new survey compiled by the Money Centre reveals that one out of five investors is currently planning to add to their portfolio.

Lynsey Sweales, director of the Money Centre, said that findings prove that "scaremongering over house prices dropping is not a major concern for professional landlords".

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4195.html. Alternatively, please see our full press release archive.

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