Posts Tagged ‘demand’

Strong Demand For Rented Property

Friday, August 27th, 2010

RICS has reported that the lettings market remains buoyant, as increased tenant demand and a shortage of properties pushes rents higher.

The latest RICS Residential Lettings Survey found that 26% more chartered surveyors reported a rise in demand for property rather than a fall, which was the second consecutive quarter that lettings demand has risen at a pace above the long run average. Tenant demand increased across all regions, but was strongest in London and the East of England. Continued difficulty in securing mortgage finance, worries over a double dip in housing and large deposits required by lenders are leading to higher numbers seeking to rent rather than buy.

As a result, rents increased for the second consecutive quarter, with 27% more surveyors reporting a rise in rents than a fall. Just a year ago the picture was very different, as over supply pushed rents down and 29% more surveyors reported falling not rising rents.

Although interest rates are at a record low, difficulty in securing buy-to-let mortgages is contributing to the lack of supply. New supply of property to the market remains low and has now fallen for four consecutive quarters, although at a slightly slower pace. In the run up to July the net balance of surveyors reporting a fall in landlord instructions was -6, in comparison to a net balance of -12 in the previous quarter.

However, existing landlords do not appear to be in any rush to dispose of their property; just 4.1% of landlords said they intended to sell their properties at the end of a tenancy agreement.

Looking ahead, the outlook for rents remains positive. 33% more surveyors expect rents to increase over the next quarter rather than fall. Rents for houses are expected to marginally outperform flats, with the net balances for this forward looking indicator moving to +34 and +31 respectively.

RICS spokesperson James Scott-Lee said: “Supply of lettings property continued to fall in the three months to July although at the slowest pace in a year which amid rising tenant demand has helped propel rents higher for the second consecutive quarter. Existing landlords keen to expand their portfolio may still be struggling to access the necessary finance despite improved market conditions.

“However, there is a possibility the lettings market could face a modest increase in supply in the coming months. The latest RICS Housing Market Survey shows a lack of funding has stifled demand from buyers which may cause some moderation to rents as more opt to let than sell.”

David Salusbury, chairman of the National Landlords Association, said: “We welcome the latest RICS survey findings which point to strong demand for rented property. The growing need for private-rented accommodation demonstrates the importance of the role played by residential landlords.

“However, it is not all good news. One in five landlords are experiencing rent arrears and many are concerned about the increase in Capital Gains Tax. Added to the forthcoming cuts to Local Housing Allowance and the possibility of increased interest rates, it is clear any increase in rents will be quickly offset by these additional factors that have to be taken into account.”

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‘Unprecedented Demand’ From Prospective Tenants: Countrywide

Tuesday, July 20th, 2010

Countrywide has reported record demand saw 50,480 new tenants registered for rental accommodation in the second quarter of the year, which represents a 16% increase since the start of the year.

June saw the sharpest increase with over 18,000 new tenants registering, the highest number in a single month since records began, 22% more the previous month. The rise in demand is a sharp contrast to the fall in the number of new properties being offered, which has fallen 6% in the last three months.

The government’s increase in capital gains tax does not appear to have deterred new first time landlords coming to the market, which has increased by 6% since the last quarter. Countrywide says that fears that London landlords would be hit most by capital gains tax appear unfounded with a 4% increase in new landlords letting their properties.

The excessive level of demand has led to marginal increases in rental prices. As more families turn to renting, four bedroom properties have seen the highest increase, with the average rent rising to £1,090 per calendar month – a 4% increase compared to Q1 2010.

There is now an average of 5.5 tenants vying for each property compared to 4.9 tenants in the first three months of the year. The highest demand remains for two bedroom houses in the South West with 8.9 tenants vying for each property. This level of demand is having a significant impact on the market, with properties being snapped up within on average of two weeks – 3 days less that in Q1 and 6 days less in Q4 2009.

John Hards, Countrywide Residential Lettings, co-managing director, said: “The number of tenants’ entering the market is at unprecedented levels – and we have yet to enter the peak season. Student demand for private rental accommodation will increase further with university applications at record levels.

“The buy-to-let sector remains a good source of investment, however, the government need to do more to incentivise new landlords in order to appease the current shortage of properties. If tenant levels continue to rise at the same rate, this will be further exacerbated.”

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Landlords Expecting Continued Increase In Tenant Demand

Monday, July 19th, 2010

29% of landlords recorded growing levels of tenant demand during he second quarter of the year, compared to 10% who said it was falling, according to Paragon Mortgages’ PRS Trends Report.

This compares to the first quarter of the year, when 24% of landlords reported growing tenant demand and 8% reported falling levels of demand. Tenant demand was stable for the 54% of landlords during the second quarter, whilst 7% said they were unsure which direction demand was heading.

Landlords expect tenant demand to strengthen considerably: 35% of landlords expect demand to be higher in 12 months’ time, with 8% forecasting a decline.

Nigel Terrington, Paragon Group chief executive, said: “Tenant demand has been rising consistently for two years and shows no signs of slowing down. Would-be home buyers continue to be unwilling or unable to step onto the property ladder, whilst longer-term social changes, such as greater numbers of single person households and economic migrants, are also creating more demand for rented property.

“Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios.”

There was a significant increase in the proportion of landlords planning to purchase, with 21% intending to purchase during the third quarter of the year, up from 12% who said they wanted to purchase in the second quarter.

Four out of 10 landlords said that they attempted to secure buy-to-let finance for purchase or remortgage purposes during the second quarter, with 52% of those saying that it was more difficult than previous attempts to secure finance, with just 13% stating it was easier.

Landlords said that a wider availability of mortgage finance, tax incentives and sustained levels of tenant demand would encourage further investment in the PRS. Just over four out of 10 landlords (43%) said they would like a better tax environment to help expand their property business, with 45% calling for the expansion of available mortgage finance.

Terrington said: “It is clear that confidence is high amongst the landlord community, which is reflected in the greater appetite for investment. There is obviously a dislocation between landlords’ intention to purchase and their actual ability to do so given the continued scarcity of buy-to-let mortgage finance. However, PRS Trends confirms that landlords still value residential property as an investment vehicle.”

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Tenant Demand ‘Set To Soar’

Thursday, May 27th, 2010

Tenant demand ’set to soar’

25 May 2010

Belvoir Sheffield reveal 23% of chartered surveyors reported a fall rather than a rise in the number of new landlord instructions in the second quarter, up from 18% in the previous quarter, indicating that tenant demand could increase to aberrant levels.

Rick Flay, Director at Belvoir Sheffield, said:

“Here at Belvoir Sheffield we are seeing proof that tenant demand is certainly increasing, to the point where we are seeking out new properties in Sheffield and the surrounding areas.

“We are urgently looking for one and two bedroom flats in Sheffield, along with one and two bed terraced houses in the S1, S2, S3, S7, S8, S10 and S11 postcodes, after a significant increase in tenant enquiries.”

With critics pinpointing the sudden upturn in the housing market as a large factor, many accidental landlords have been tempted away from the lettings market.

First time buyers unable to get a foot on the property ladder are still a major source of increasing demand for good rental properties, with houses remaining more popular than flats, causing a supply/demand imbalance which is also helping to increase rental expectations.

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Tenant Demand Remains Strong

Wednesday, April 14th, 2010

12% of landlords are planing to purchase investment property in Q2, according to Paragon’s latest PRS Trends Report. This is compared to 10% who said they would buy in the first quarter of the year.

Of those planning to purchase, terraced housing is the preferred option, with 67% intending to purchase this type of property, followed by semi-detached housing (25%).

Nigel Terrington, Paragon Group chief executive, said: “Demand for property investment has remained strong during the recession and has improved since house prices stabilised. Landlords know that the long-term forecast for tenant demand is extremely healthy, with socio-economic and demographic changes leading to growth in the number of households calling the private rented sector home.

“Government figures show that the private rented sector is the only housing tenure that is currently growing. The proportion of households in both owner-occupation and social housing was in decline for the best part of the previous decade, and the private rented sector has picked up the slack. One in seven households now lives in privately rented accommodation.”

Tenant demand remains strong, with 24% of landlords stating that demand grew during the quarter, compared to 8% who said it was declining. The proportion of landlords stating that tenant demand was declining was lower than the previous quarter, when 13% of landlords said tenant demand was falling.

Landlords expect tenant demand to strengthen considerably, with 36% of landlords forecasting demand for their property to be higher in 12 months’ time.

The average portfolio value increased for the second quarter in succession, rising by 6.1% during the period to £1.52 million. This figure takes into account both property values and sales and acquisitions, so it could be a sign of landlords adding to their portfolios, as well as firmer house prices.

Landlords expect the average value of their portfolios to be 1.2% higher in 12 months’ time.

Access to mortgage finance remains an issue. Of those who attempted to secure mortgage finance for purchase or remortgage purposes, 82% said it was more difficult compared to the previous quarter, with 7% stating that it was easier.

Yields were 6% during the period. Yields, a portfolio’s annual rental income as a percentage of its total value, had been rising since the first quarter of 2008. However, for the past three quarters the figure has bounced between 6% and 6.2%

Terrington said: “Landlords are in a strong position. They are enjoying unprecedented levels of tenant demand, and structural changes taking place in the UK will create further demand. As the Royal Institution of Chartered Surveyors recently highlighted, this is leading to higher rental income.

“Whilst this is positive for existing landlords, it emphasises the vital need to expand PRS supply. Supply is being inhibited by a lack of available mortgage finance and there is a danger that households could eventually be priced out of the sector.”

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Rental Demand For Managed Properties Increases

Wednesday, March 31st, 2010

As the lettings market continues to thrive in an otherwise challenging property market, Townends Estate Agents, part of the Badger Holdings Group, have seen a huge increase in demand for managed properties in the last 18 months.

In an ever changing legislative industry, Townends have found that more landlords are realising the value in switching to a full service option to manage their properties.

Landlords are keen to use a professional agent who has full, up to date knowledge and understanding of compulsory legislations including Energy Performance Certificates, Tenancy Deposit Scheme and Houses of Multiple Occupancy amongst many others.

In addition, when looking for properties, more and more tenants are also requesting to rent a managed property.

As well as landlords, tenants wish to benefit from full security on maintenance issues being dealt with promptly during the course of their tenancy, knowledge that their deposit has been handled in line with legislation and peace of mind that a professional agent is on hand to assist with any needs whilst they are renting.

Caroline Kavanagh, Group Lettings Director for Badger Holdings comments:

“The last 18 months has seen a significant rise in the number of landlords opting for a managed service. In light of this, we have created an adaptable service which can facilitate tenants’ and landlords’ varying expectations from one situation to the next.

“We understand that this job requires diplomacy, attention to detail, good time management and strong negotiation techniques therefore we tailor our service to the individuals’ requirements, including offering an out of hours emergency service.”

From the landlord’s point of view, having a property managed means they have a dedicated team of people with whom they can liaise with on all matters relating to their property. There is less pressure as the formalities are taken care of, which can be particularly helpful for a landlord with a large portfolio.

A managed service can help deal with the service of official notices, minimise rent arrears situations and provide fully vetted contractors for all maintenance works. Any defects will be reported to a dedicated maintenance team, who upon receiving instruction from a landlord, will arrange works (this can be anything from boiler repairs to window replacement to full decoration/refurbishment to the property).

At the end of the tenancy a dedicated property manager will assist with negotiating the dilapidations to the property with the tenant and landlord, guided by the strict legislation of the Tenancy Deposit Scheme enforceable since April 2007.

Caroline continues:

“Property management involves the processes, systems and manpower required to manage the life cycle of a tenancy, which many landlords, having experienced the process themselves, now realise the benefit of having a managed service.”

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Tenant Demand For Property Continues To Rise

Wednesday, March 17th, 2010

In the three months to January, tenant demand for residential property continued to rise at a similar pace to that recorded in the three months to October, reveals the RICS residential lettings survey November 09 – January 2010

A net balance of 16% more surveyors reported a rise in demand for property than a fall. Within this, there was greater demand for houses than previously, with 27% more surveyors reporting a rise. This compares with 23% in the previous quarter. Respondents reported that demand for flats continued to edge up although at less than half the pace of that for houses.

Meanwhile, new instructions were down for the second consecutive quarter, and at a faster pace, with 23% more surveyors reporting a decline than a rise. Interestingly, surveyors found no difference between new instructions for flats or houses, both registering a net balance of -24%. The fall in instructions is consistent with evidence thatmore supply is at last finding its way onto the sales market.

The shift in the balance between demand and supply is now being reflected in a turnaround in the rental picture. More surveyors reported a rise in rents than a fall, albeit only just, for the first time since the three months to July 2008. This marks a significant shift in sentiment as it is only six months ago that the net balance on rents was negative to the tune of 58%. The rental net balance edged up to 0% compared to –3% in the previous quarter.

Meanwhile, rents look likely to push upwards over the coming months with respondents to the survey becoming more positive on expectations; the net balance reading increased to +33%.

Even though less property is coming onto the market, landlords appear in no rush to sell their property at the expiry of a tenant lease. The proportion planning to do so has risen only a fraction on last quarter’s result of 3.2% to 3.6%; it still remains below the long run average.

Turning to the regional picture, tenant demand was strongest in the South West market while London was amongst a number of regions seeing demand moderate. New instructions were down across all regions, with the South East experiencing the greatest fall.

Rents declined in most regions, but at a slower pace than previously was the case. London and the South East were exceptions to the broader picture with agents reporting positive net balances on rents in these areas. Gross yields were down across all regions, with the South East proving, once again, to be an exception to this.

RICS spokesperson Jeremy Leaf commented:

“It is becoming clear that movements in the housing market are affecting lettings: the RICS housing survey has seen a steady increase in the number of new instructions coming on to the market over the past few months, whilst simultaneously we see with this survey that the number of properties available to rent has decreased.

This is a clear sign that the accidental landlords are returning to the sales market. If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties.”

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Rising Rental Demand Means More Opportunities For Buy To Let Investors

Wednesday, February 10th, 2010

Leaders, the independent letting specialist, is reporting an increase in demand for rental accommodation at the start of 2010.

With demand outstripping supply in parts of Sussex, Hampshire, Surrey, Hertfordshire, Berkshire, Buckinghamshire and Dorset, where the firm has a total of 42 branches.

Leaders’ managing director, Paul Weller, says:

“Despite the disruption of the snow during the first two weeks of January, most of our branches experienced an incredibly busy month, with high demand for all types of properties, from studio and 1 or 2 bedroom flats to big and small family homes.

“We are finding that good quality properties are being snapped up quickly with many people waiting for more to come onto the market. This is an excellent time for anyone considering buying a property to let, or renting out their home, to enter the lettings market.”

Although the UK is officially coming out of recession, many people are still either unwilling or unable to take on a mortgage and are choosing to rent rather than buy. The availability of finance for first-time buyers has not improved significantly since last year and is still stifling the sales market, leading to increased demand in the rental sector.

Whilst recent research by the Association of Residential Letting Agents (ARLA) shows that 54% of landlords believe that tenants are being forced into renting as they either cannot afford to buy; cannot find a competitive mortgage; or are unable to find a suitable property to buy (these tenants have been coined “reluctant tenants”), Leaders believe that a significant number are choosing to rent because they prefer it.

Mr Weller says:

“Renting offers a more flexible and carefree lifestyle than buying. There are no worries about maintenance and repair costs, fluctuating interest rates affecting mortgage payments, or committing to a property or area long-term. Many people want or need to be able to move easily for work and enjoy the freedom that renting offers.”

This attitude towards renting, which is becoming more similar to that of mainland Europe where renting is the norm, means that renting out a property – provided it is done with professional, expert advice – is an attractive long-term investment.

Mr Weller says:

“Boom or bust, the letting market has the capacity to thrive: when the economy is doing well, people want the flexibility to move for work opportunities; when it is doing badly they prefer not to commit to a mortgage and the additional expenses of home ownership. Throw in the issues we have been experiencing lately – a credit crunch and a slow sales market – and it is clear why the lettings market is doing so well.

“Overall, we are very positive about 2010 as we expect the high demand for rented accommodation to continue in the face of both the slow sales market and the wider economic uncertainty.”

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Reluctant Tenants Rise As Demand Outstrips Supply

Wednesday, January 27th, 2010

The UK housing market is experiencing a trend of ‘reluctant tenants’, following a shift in supply and demand for properties, according to the Association of Residential Letting Agents (ARLA).

ARLA’s research, conducted across UK letting agents and landlords, reveals that the surplus of rental property is reducing, while demand for properties rises.

According to ARLA, this shift has generated a wave of reluctant tenants. During Q4 2009 an average 41% of members surveyed reported more tenants than properties – compared with just 24% last quarter. In addition, ARLA research among landlords revealed that 54% of those asked felt that consumers were being forced to rent rather than buy.

Ian Potter, operations manager at ARLA, explains:

“New tenants include those homeowners who were forced to sell their home during the last year either due to financial instability or a job-move. And many people now in a position to buy are struggling to find the right property, as there is also a shortage of both properties for sale and realistic mortgages.

“This rise in tenants is a positive sign for the industry, as it indicates increased market movement. It also shows that many more people will learn the benefits of living in rental accommodation.

“However, as demand exceeds supply we are faced with a new challenge, how to provide enough good-quality rental properties to meet this demand. These figures confirm our long-held view that a strong Private Rented Sector (PRS) will be fundamental in meeting the accommodation needs of future generations. But without significant government support, the sector will likely struggle.”

In August 2007 53% of ARLA members surveyed felt that there were more tenants than properties – but this figure then dropped, reaching a low of 10 per cent in February 2009. The number of available properties began increasing again last quarter.

ARLA research for the fourth quarter also shows that the period for which properties are unoccupied has fallen once again, with the average void period for the UK down from four weeks to 3.9 weeks, as tenants snap up available properties quickly.

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Letting Agents Are Experiencing High Levels Of Activity In Run Up To Christmas

Wednesday, December 9th, 2009

65% of consumers currently looking for new lettings accommodation

Landlords and letting agents are experiencing high levels of activity in the run up to Christmas according to a poll conducted by lettingsearch.co.uk.

Sustained high demand from current and potential tenants as Christmas approaches is keeping landlords and letting agents busy, greatly reducing the number of un-let properties and void periods over the festive season, in contrast to the situation in 2008.

While December and January have traditionally been quiet, with fewer people moving into new lettings accommodation, December 2009 is busy with tenants looking to move before the New Year, when rents are widely expected to increase further.

Potential buyers continue to be cautious about committing to a purchase as house prices look set to dip further, creating additional demand for rental homes.

Phil Calderbank, Director at lettingsearch.co.uk, comments:

“All signs are pointing to high levels of market activity right up until Christmas itself, which is great source of seasonal cheer for lettings professionals, allowing them to cut down on void periods and in many cases achieve the best rents possible for their properties.

“Current tenants are looking to get a good deal on the rent while they can, as supply continues to shrink and rents look likely to continue on their upward path in the New Year. Buyers are also playing a waiting game, choosing the lettings market instead of sales, until mortgage lending improves.

“Such strong levels of demand at this stage in the year suggest that the lettings market is set for a year of sustained recovery and consolidation in 2010.”

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