Landlords manoeuvre over looming issues
Capital values have increased and returns in the private rented sector have remained largely unchanged this autumn but bureaucracy is driving landlords who own Houses in Multiple Occupation out of their market.
The quarterly survey from the Association of Residential Letting Agents also showed that immigrants from the new European Union states are making less demands on rented property stock than many believe - but obtaining references on these prospective tenants is proving to be a major problem.
Adrian Turner, chief executive of ARLA said, "The mainstream rental market continues to flourish. It is only at the margins that trouble could arise if these two problems are not addressed swiftly."
Overall, the average asset value of houses to rent has increased by 7.4% in the last three months as a result of rises of 11.4% in prime central London and 21.3% in the rest of the UK. By contrast, the average value for houses in the South East outside prime central London fell by 4.4%.
In the same period, rented flats rose by an average of 4.7% for the country as a whole with increases in prime central London at 3.5% and the rest of the UK outside the South East increasing by 16%. In the rest of the South East, the value of flats fell marginally, by 0.3%.
Returns on asset values have changed little in the past three months, although achievable rent levels have increased overall. In the last three months rents have increased in prime central London but have remained largely unchanged in all other parts of the country.
The ARLA research carried out with the support of the ARLA Panel of Mortgage Lenders - Birmingham Midshires, GMAC Residential Funding, NatWest, Mortgage Express, Paragon Mortgages and The Mortgage Business - also revealed two significant new trends.
The latest three-monthly survey shows that well over half of those landlords who have disposed of properties used as Houses in Multiple Occupation have done so because of bureaucracy and too many new regulations. These factors are just as likely to have influenced decisions to abandon that part of the market as the additional costs of licenses and alterations.
On the question of immigration, the majority of letting agents describe incoming tenants from the new EU countries as only having some effect on the rental market. Just one in twenty believe that EU immigration has made any dramatic impact on the market.
The most significant problem for the private rented sector caused by the new immigration is the difficulty in checking references. One in twelve agents say it is proving impossible to get references on prospective tenants who come from the new EU accession states.
Unsurprisingly, immigrants have had the least effect on the rental market in prime central London. They have had the most effect away from the South East.
In London and the South East, the balance of supply and demand for rental properties has continued to improve. More than seven out of ten ARLA agents in prime central London report that there are more tenants than there are properties. This is an increase of ten percent over the previous three months.
Agents throughout the South East who also report more tenants than properties have increased from 34% to 37%. However, there is a small drop in the rest of the UK, with the number of agents reporting more tenants than properties falling from 34% to 32%.
Compared to the third quarter, the average void period has fallen from 26 to 25 days. This reflects properties remaining empty for shorter periods in both prime central London and the rest of the South East.
Once installed, tenants are staying put for an average of 15.7 months. This is up marginally from an average duration of 15.6 months reported at the end of the last quarter.
"These lengths of tenure suggest that the private rented sector is providing the sort of property that people want to live in as well as giving them choice and flexibility," Adrian Turner pointed out.
Capital values have increased and returns in the private rented sector have remained largely unchanged this autumn but bureaucracy is driving landlords who own Houses in Multiple Occupation out of their market.
The quarterly survey from the Association of Residential Letting Agents also showed that immigrants from the new European Union states are making less demands on rented property stock than many believe - but obtaining references on these prospective tenants is proving to be a major problem.
Adrian Turner, chief executive of ARLA said, "The mainstream rental market continues to flourish. It is only at the margins that trouble could arise if these two problems are not addressed swiftly."
Overall, the average asset value of houses to rent has increased by 7.4% in the last three months as a result of rises of 11.4% in prime central London and 21.3% in the rest of the UK. By contrast, the average value for houses in the South East outside prime central London fell by 4.4%.
In the same period, rented flats rose by an average of 4.7% for the country as a whole with increases in prime central London at 3.5% and the rest of the UK outside the South East increasing by 16%. In the rest of the South East, the value of flats fell marginally, by 0.3%.
Returns on asset values have changed little in the past three months, although achievable rent levels have increased overall. In the last three months rents have increased in prime central London but have remained largely unchanged in all other parts of the country.
The ARLA research carried out with the support of the ARLA Panel of Mortgage Lenders - Birmingham Midshires, GMAC Residential Funding, NatWest, Mortgage Express, Paragon Mortgages and The Mortgage Business - also revealed two significant new trends.
The latest three-monthly survey shows that well over half of those landlords who have disposed of properties used as Houses in Multiple Occupation have done so because of bureaucracy and too many new regulations. These factors are just as likely to have influenced decisions to abandon that part of the market as the additional costs of licenses and alterations.
On the question of immigration, the majority of letting agents describe incoming tenants from the new EU countries as only having some effect on the rental market. Just one in twenty believe that EU immigration has made any dramatic impact on the market.
The most significant problem for the private rented sector caused by the new immigration is the difficulty in checking references. One in twelve agents say it is proving impossible to get references on prospective tenants who come from the new EU accession states.
Unsurprisingly, immigrants have had the least effect on the rental market in prime central London. They have had the most effect away from the South East.
In London and the South East, the balance of supply and demand for rental properties has continued to improve. More than seven out of ten ARLA agents in prime central London report that there are more tenants than there are properties. This is an increase of ten percent over the previous three months.
Agents throughout the South East who also report more tenants than properties have increased from 34% to 37%. However, there is a small drop in the rest of the UK, with the number of agents reporting more tenants than properties falling from 34% to 32%.
Compared to the third quarter, the average void period has fallen from 26 to 25 days. This reflects properties remaining empty for shorter periods in both prime central London and the rest of the South East.
Once installed, tenants are staying put for an average of 15.7 months. This is up marginally from an average duration of 15.6 months reported at the end of the last quarter.
"These lengths of tenure suggest that the private rented sector is providing the sort of property that people want to live in as well as giving them choice and flexibility," Adrian Turner pointed out.
posted by tony at 6:14 PM
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