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Despite continuing economic difficulties, the future still looks bright for the Private Rented Sector (PRS) of the UK housing market.
Although the government’s stated aim is to encourage home ownership, difficulties in getting affordable mortgages are making it extremely difficult for first time buyers and it’s unlikely the budget measures to help them will have much of an impact on this. According to figures released recently by the English Housing Survey (2009-10) instalment, home ownership has declined from 14.8 million households in 2005 to 14.5 million in 2010. Likewise, the social housing sector continues its decline, while private renting has increase by 1.0 million households in the same period.
Whilst in most areas house prices have declined over the last 12 months, rents have continued to be steady or even increase due to the increasing demand. Where landlords have quality tenants their cash-flows and therefore investment yields have been very good compared to alternative investment options.
Interest rates have remained low and despite continuing speculation of imminent increases it’s hard to see that the government would risk slowing economic growth and putting thousands of indebted consumers in peril by rasing rates to any great extent in the short-term. Undoubtedly, however, inflation, the friend of indebted governments, will raise its ugly head again due to increasing commodity prices and all the money printing that’s gone on.
Britain is far from out of the economic woods and desperately needs economic growth to support and increase employment, a major factor for landlords with regard to rent arrears.
With Housing Benefit claimant numbers at a twenty year high, the government is seeking to control expenditure through measures outlined in its June 2010 Budget and October’s Spending Review.
62% of social renters and 24% of private tenants claim HB, so cuts here will have a significant impact on the PRS and some landlords. The latest unemployment forecasts from the Office for Budget Responsibility mean that a decrease in claimant numbers is increasingly unlikely short-term.
As we enter the Landlord and Property show season there are some exciting events for landlords in the offing. The next major event will be the Landlord and Letting Show in May at London’s Excel Centre, followed in June by a similar event in Manchester. The Landlord & Letting Show at Olympia in September is followed by the Property Investor Show at the Excel Centre in October, and finally the Landlord & Letting Show at the NEC Birmingham just about rounds it off. All details here:
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This issue is sponsored by: Cover4LetProperty
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