Golden Times for UK Landlords.

In 2010, the lettings property market experienced high rental increases nationwide. This was caused by the lack of quality houses for rent


together with soft conditions in the sales market. The softer conditions have been mainly driven by the low levels of mortgage lending volumes which, according to the Council of Mortgage Lenders have been falling for the last six months (data up until the end of October 2010.) Furthermore, the economic conditions across Europe together with the uncertainty surrounding the interest rates have not helped matters.





Landlords especially have benefitted from these conditions, seeing rents pushed up to new levels as competition for the best properties remains fierce. Existing tenants are often choosing to stay put and pay a high rental increase rather than search for a new property. The UK’s largest property search engine; Findaproperty.com, has recently released a report that rents are now at their highest level in 24 months.





There is some evidence that shows supply could be picking up as the amount of new instructions entering into the market place is increasing. Hamptons International, one of the UK’s leading property companies has reported a 57 percent increase versus the same period (November) in 2009. It is hardly surprising that many property savvy business people are now entering the letting market with the rising rents and a pick of tenants.





In addition to this, Hamptons also reported a 26 percent increase in new deals compared with the same period in 2009. Although they did show static stock levels on a month by month basis, Lesley Cairns, Head of Lettings for Hamptons International UK, states that it although there will be increased supply, it is "unlikely to reign in rental price growth in the short-term." Before landlords get too excited and snap up other properties, it has been widely noted that although the short term may not see much significant change; it is likely that it will start the process of rebalancing during 2011.





This ‘rebalancing’ is all the more likely if rents push through affordability barriers and push tenant’s bank balances to the limit. Furthermore if the internal polices of the major lenders are relaxed and more LTV (high loan-to-value) products are offered, many tenants may decide to enter the sales market. Another factor is the interest rates and all eyes will be firmly on the Bank of England’s base rate to see whether renting or buying is a better option. It is impossible to exactly predict how long the landlord’s golden times may last, but at least for the next few months, they are here to stay.