Will demand for rental properties keep up with the increasing supply of buy to let properties? It is impossible to know what the answer will be but there are a few factors that will have an effect we can all see.
- Easing mortgage qualification process for residential buyers – less renters
- Easing mortgage interest rates making loans more affordable – less renters
- Low deposits and assisted deposits using the help to buy and shared ownership stimulus is clearly having an effect with increasing house sales activity – less renters
- Expectations of long term low interest rates giving buyers more confidence – less renters
- Increasing working population – some buying many renting – more renters
- Increasing number of European workers – most short term adding to the rental demand – more renters
- Increasing demand on the pay packet from electronic toys; 4G network and the ever growing lifestyle costs of living – many more renters
- Growing number of youngsters not planning their finances and living day to day – more renters
Confidence is likely to result in more sales, higher sale values and in time regular headlines of increasing house prices. The next thing will be press headlines of buyers being unable to afford to buy owing to house price increases. Then we may see another wave in the number of people renting and further reduction in home ownership.
The landlords who are at real risk of voids and weakening rents as a result of possible over supply of rental property are those with poorly maintained, tired and badly presented properties. Improvement opportunities may open up for others to buy these when they come to the sale market once landlords lose patience waiting for tenants.
We are not far away from the private rental market accounting for 1 in 5 households (in 2001 it was 1 in 10 households)
Terry Lucking is the owner and director of Belvoir Peterborough. Terry and his team of experienced valuers and buy to let advisors are willing to help investors, vendors and accidental landlords offering free pre purchase visits, honest sale and rental assessments.
Belvoir Peterborough are accredited and regulated agents. Members of ARLA, Safe agent, Safeagent and the Property Ombudsman. It is a requirement for a member of ARLA and Safe Agent to have Client Money Protection and have their accounts independently audited annually.