When will the Bubble Burst for UK Landlords?

Focus on UK lettings

Often we hear about the depressive side of the property market, where house prices have fallen and despite some signs of growth, it could take a while to completely recover. Not to mention the favourite bug bears of the property experts, such as the lack of mortgage products for first time buyers.

However, in the lettings arena of the industry it is quite a different story. Very different in fact if you are one of the landlords who weathered the economic storm and have a selection of desirable properties for rent. Due to a stagnant sales market where consumers are either staying put or can’t get a suitable mortgage, together with a lack of rental stock has meant that rental prices have risen dramatically over the last year. The website ‘findaproperty.com’ which is a national search engine for both rental and sales property has recently released a report that states that rents are now at their highest level in 24 months.

Landlords may well be benefitting from the increasing rents but would-be tenants are finding it harder to obtain suitable rental properties. Many properties are snapped up on their first few days of instructions; especially in London and the South East region. Often tenants are choosing to remain in their current abode and pay a higher rent rather than face the fierce competition in the market place.

Lesley Cairns, the Head of Lettings for Hamptons International has stated that across their lettings network they are also feeling the effect of these trends in the rental market. During November, they saw a 57 percent increase in new instructions and a 26 percent increase in new deals in comparison with the same period in 2009. Furthermore stock levels (low) have remained unchanged from October.

Other investors have also seen the benefits of the UK property market and as Hamptons’ figures show, although the stock levels remain constant, there has been strong growth in new instructions and new deals. The rise in new instructions depicts a trend that the supply of new stock may well be increasing to meet the current demand. Furthermore the 26 percent increase in activity indicates enhanced movement for the lettings sector in 2011.

The question on landlord’s lips will be whether this will have an effect on the rental price growth over the forthcoming year. Experts agree that although it will have little effect in the short-term, it will certainly go some way towards reining it in during the latter part of 2011.

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