29 Jun

Rental market faces another shift in focus

Rental market faces another shift in focus

The market for rental properties across the UK has changed again in recent times, thanks to the fact there have been more people able to afford to buy homes because of the stamp duty holiday, which saw a surge in the number of people moving to buy properties in order to evade having to pay the one per cent levy on the value of their home.

It was reported earlier this month that the number of people living in residential rental homes throughout May had dropped quite significantly. According to haart, this meant that the price of renting a home was falling.

In May, the average price of renting a property in the UK dropped considerably, eventually settling as low as £919 per month. This was a significant 4.3 per cent lower than it had been in April of this year, and comes just months after a long period of successive increases in price throughout 2011.

Andrew Benn, managing director of haart residential lettings, said: "After the record rises we saw in 2011, rents have been slowing down steadily in recent months, which is good news for prospective tenants considering renting a property in the near future.

"At the same time, we are seeing long-term tenancies becoming commonplace, so whilst landlords may not achieve the same rents as previously enjoyed, they are benefitting from  the security of tenure and with it minimising the potential for expensive void periods."

This drop in rents has led to more tenants and landlords favouring long-term tenancies in recent months, because they see the benefits that can be gained from taking a property on for more than the traditional period of just six months.

According to Gary Styles, strategy, risk and economics director at Hometrack, it is seen as essential for landlords that they get a long-term yield, and are not having to secure a new tenant every single year, while renters also prefer it because they have a long period whereby their monthly payments will be at a set price, rather than risking rises every time they renew.

This was echoed by the chairman of the National Federation of Property Professionals Mark Hayward, who said that it is likely the fact more people now see renting as an acceptable way of living as opposed to a necessity in the short term will mean that these types of tenancy become ever-more popular with both sides of the rental market.

He said: "You have got the security of income servicing that investment. The European model - whether it is Spain, France or Germany very much supports it.

"Also, if the tenant has got a secured tenancy for a period of time - we are talking years - then they are far more likely to take care of that property and invest in it because they are going to reap the benefits from that investment."

Mr Hayward said that the current trend of downward pressure on the rental market will not last. He added that the current sector sees 12 to 14 per cent of all homes being occupied by tenants, and this is a figure which is set to rise above 20 per cent by the year 2020.ADNFCR-1222-ID-801397593-ADNFCR

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