Despite much doom and gloom about buy-to-let in the press recently, Leaders – one of the UK’s largest independently owned letting specialists – is very positive about the long-term future of the lettings market.
Says Leaders’ managing director, Paul Weller: “Although rising interest rates and slower capital appreciation will obviously have an affect, this is not deterring those investors who take a long-term view of the market, and with good reason.”
Leaders believe that the reasons for this confidence – despite recent negativity in the press – become clear when you consider a number of factors at work in the current UK housing market, all of which are favourable for lettings. These factors are: high house prices; rising rental demand and rents; and the propensity of landlords to invest for the long-term.
Underpinning all of these is the huge inequality between housing supply and demand in the UK. Says Paul: “The recent ‘Home Truths’ report by the National Housing Federation shows that we are building around 55,000 fewer homes per year than we need. With shortages like this in the face of strong demand, it is unlikely that prices will drop back or slow down in anything other than the immediate short term, which will mean people will continue to struggle to get on the housing ladder.”
Further demand is coming from overseas nationals. Research recently published by the Office for National Statistics (ONS) reveals that the number of overseas nationals who entered the UK and registered for a National Insurance Number between 2006 and 2007 was 713,000 – a total of 51,000 more than between 2005 and 2006. All these people need somewhere to live, and the vast majority will rent.
Says Paul: “Most of these overseas nationals are in work and able to pay rent. And the majority are young, so their earnings are likely to improve, making them ideal tenants. We are also seeing strong demand from people who prefer to rent for convenience and flexibility, and from those waiting to see what happens in the sales market.”
Leaders can confirm the finding in ARLA’s latest quarterly survey of member letting agents that tenant demand now outstrips supply in all areas of the rental market. They too are experiencing very strong rental demand in all their 31 branches across Sussex, Surrey, Hampshire, Dorset and Berkshire, with rents rising in response to demand. Says Paul: “Most of our branches report that many tenants reaching the end of their tenancies are extending, and that newly available properties are letting very quickly.”
Considering all the above, it is not difficult to see why confidence is high among landlords, despite recent interest rate rises. A variety of recent landlord surveys show that the majority of landlords intend to hold on to their investments for an average of 15 years, making the level of returns during periods of high interest rates less significant. Leaders have always advised their landlords to take a long-term view, and this has never been as important as it is now.
Says Paul: “Despite the doom-mongering in the press, many of our landlords see this as an excellent time for extending their portfolios. A slower sales market means more chance of a good buy for landlords willing to do their homework.
“However,” he warns, “it is now more important than ever that investors are prudent and seek expert advice on where to invest and what type of property to invest in. At Leaders we know our local markets inside out and are aware of many excellent opportunities available but, as always, there are also certain areas and property types that are best avoided in the current market. Landlords should never underestimate the value that an experienced lettings specialist can bring to their investment.”
Lisa Martin, PR Manager, Leaders Group www.leaders.co.uk Tel: 01903 837733 E-mail: email@example.com