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Investing smarter in 2009

18th November 2008 | back to article listings BACK    print this article PRINT

While 2008 has not been such a good year for those trying to buy or sell a house, it has been very positive for landlords. While some have predicted the death of buy-to-let, long-term investors keen on making their money through rental means over the next few years have been enjoying a situation in which demand has risen and with it the level of returns.

This being the case, 2008 has been healthy enough. But one factor appears to have emerged as a possible threat. In its latest survey of the industry, the Royal Institution of Chartered Surveyors (Rics) has revealed that in the third quarter 27 per cent more surveyors reported a rise in demand for rented property over those reporting a fall in demand. However, it also found that this demand is not turning into ever higher rental returns, because the level of demand is now being matched by supply.

Rics explained that this has been happening because the very downturn in home sales that has boosted rental property has in turn led to a lot of property owners frustrated by their inability to find a buyer resorting to making their homes available for rent instead. The majority of surveyors reporting a rise in instructions to put flats up for rent was 50 per cent and for houses it was 68 per cent. Correspondingly, a majority of 12 per cent reported falling rents in the third quarter.

Commenting on these findings, Rics spokesperson James Scott-Lee did not ague that investing in property will no longer bring good rental returns. He suggested that the key might be to pick the right geographical area. Analysing the data he said: "The market place has become more and more competitive as many vendors have been forced to become amateur landlords, creating an inevitable downward pressure on rents where supply has matched demand. With national average house prices set to weaken in 2009, yields may increase for those investors who can provide the right product for the right market place."

The right product in the right place may indeed be the key to doing well in the coming year. In his own verdict on the findings of the survey, operations manager of the Association of Residential Lettings Agents Ian Potter noted that geographical variation is a notable feature of the market. He remarked: "The rental market is clearly very robust in certain parts of the country but this trend is far from being uniform and, in fact, it could not even be said that it is a standard trend across certain cities. In London, for example, there is a huge discrepancy in the strength of rentals from area to area. "

So for those keen on investing in property in the year ahead, the message seems to be that while some areas will have an oversupply, others will not, so those who are investing may be best checking out first what the situation is in the area they are considering before parting with their money.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4491.html. Alternatively, please see our full press release archive.

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