By Steve Roulstone
I have said before that the Sales market, which when healthy helps to ease finances in the UK market as a whole, would benefit from support for Landlords wishing to feed the demand for rental properties and current reports on rent increases confirm that the market is reacting to the demand in achieving the reported rises. The market (rent) will of course find its own level and whilst that needs to be looked at as a wider picture rather than just what is happening now, there is no doubt that the flicker of easing of availability we saw earlier this year is needed now more than at any other time in the last three years.
Lack of available property.
The report confirms that the demand has continued to increase over the last year and whilst once again the majority of what is reported refers to the market in London, the rest of the Country is also seeing higher demand, for as has been said for many a decade, what happens in London, flows through the whole country in time. But one point I would like to pick up on is that it is unusual for property to be let within one day! Well at my own office, this happens every year and far more often than the reporter would seem to appreciate for it to be worthy of note. Perhaps they have so much property available in London that renting in one day becomes unusual, for the majority of the Country it is not unusual and hopefully helps to explain for the rest of us why the need for more property is greater outside of London.
Rents catching rate of inflation .
One thing that the current increase is confirming is that the rate of inflation for the last ten years matches the increase in rent for the same period. I am of course aware that region by region this will differ, but locally when the average rent for a three bed semi (most common and popular type of property) is viewed for the last ten years, the increase falls just short of inflation, being between 2.25 and 2.5% per year. Therefore Landlords are not taking advantage of the situation financially, by charging more than is justified, rather the increases are placing rents where they would expect to be in line with inflation. The only area where they perform better, is when set against other methods of investment, for whilst value of property may have declined recently, increased rents, especially for those with flexible mortgage rates, have continued to repay Landlords for their investment.
Is anybody watching?
To return to my initial point in this Blog, if those in a position of influence are looking at this demand and increase in rents closely, then hopefully Buy to Let Mortgages will show signs of being more readily available again. Last time I made the same call, the financial situation was not as poor as it currently stands, with European Country after Country struggling to maintain its own economy without being bailed out and the possible fall out to our own markets should our exports be badly hit. Add this to the effects of our own stringent financial measures starting to take effect, especially in the public sector and it is difficult to be positive, so any request for easier terms would be matched by more demands for care. However, I am sure that there is room for some movement and as heard on a report earlier this week (cannot confirm where as I was passing a radio in the middle of Oxford supposedly on Holiday!) Buy to Let mortgage applications are on the increase and the return is increasing and by ignoring this improving market again, I believe another opportunity to kick start the sales market will have been lost!
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