upad CEO predicts a potential increase of 25 percent in people choosing to rent in 2009
Renting a home in the UK will no longer be taboo in 2009, according to James Davis, founder of online property rental site, www.upad.co.uk.
He predicts that the UK property market is heading towards the European model where it is commonplace for people to rent, as opposed to buy somewhere to live.
Davis sees various factors contributing to this trend:
On a macro level, he believes that the UK will see interest rates fall still further than the 57-year low of 4 December 2008.
Rents will also stabilise (having fallen eight percent in the past year).
In contrast, Davis thinks house prices will continue to fall, potentially by another 15 percent.
Despite this drop, Davis predicts that house prices will still be high enough to prohibit most first time buyers from getting on the property ladder. This will be reinforced by the uncertain employment market, making people unwilling to commit to taking out mortgages.
However, explaining that the market will actually work in favour of both tenants and landlords, Davis commented:
“Property has always been a long-term game. Falling house prices will make it a good time for landlords who have been in the market a while to add to their portfolio. Those who have built up real equity will be in the enviable position of being able to buy stock at reduced prices.”
He added: “Stabilising rents will also give them a much better return on investment than they have witnessed in recent years. And, this time around loan to values should be far more manageable.”
Davis believes this will increase the number of rental properties available, potentially by 25 percent to over four million. He commented:
“By giving tenants choice, this will work towards renting being a norm, as opposed to a taboo.
“I predict that today’s market conditions will improve the currently tarnished reputation of the buy-to-let sector and make it a viable option again.”