Assetz® News - Cities seeking rental

Cities seeking rental

11th July 2008 |

With so many recent headlines questioning the future of buy-to-let and the UK private rental sector, it may seem as if the industry has few advocates at present.

Not so in the city of Exeter, however. The local estate agents appear to still be enjoying a boom time in the city, the Express and Echo has reported.

A key example of this is Wilkinson Grant estate agents in the Southernhay district, a firm that clinched £9 million of business in June alone. Chief executive Roger Wilkinson told the paper the most notable case was that of a nine-property portfolio sold for £3 million inside two days without even being advertised on the open market, all this at what Mr Wilkinson said was a 15 per cent higher price than would have been commanded in 2006.

Mr Wilkinson told the paper: "In a market where many buyers and sellers are feeling uncertain, it's good to see that people will still see the property market as a reasonable place to put their money."
Chairman of the Exeter Estate Agents Association Simon Cooper added a similarly optimistic tale, stating: "The investment market is quite good as long as they are backed up by rents. Yields are still going up. It's encouraging."

One major factor in the Exeter situation is the student rental sector, with Wilkinson Grant's senior negotiator Tony McGhee saying this was a key element of the firm's business. Indeed, the aforementioned £3 million portfolio was one such example.

But can student lets alone account for a city such as Exeter continued to enjoy a strong rental market? After all, cities all over the country have universities and while there are many bigger cities than the 100,000 or so that live in the Devon locality, many other centres of population have several higher education institutions.

For those looking to find the best locations for buy-to-let in the UK, the answer may lie in a report published this week by urban research body Centre for Cities.

In its study on the issue of government plans to build three million new homes by 2020, the body argued that it was important for each city to have a tailored plan according to local needs. It pinpointed cities such as Cambridge and Bristol as cities lacking affordable homes and therefore requiring plenty of rental accommodation for key workers. This contrasted with the identified problem of a lack of large and attractive houses for highly skilled and professional workers in cities such as Bradford, Hull and Sunderland.

While building more large homes to buy was the priority the body suggested for the latter category of cities, it advocated the deliberate construction of more homes for rent and the increase in size and quality of rental choice in Cambridge and Bristol.

While the policies implemented for constructing new homes may or may not take on these localised strategies, the identification of need in certain cities indicates that investors in the south-west will have more than just Exeter to look at as a market with plenty of potential custom, as of course will those in the east considering the potential of England second-oldest university city.