RENTAL MARKET REMAINS BUOYANT

13 08 2013

Renting is fast becoming a new way of life in Britain – despite lower interest rates and better mortgage deals becoming available for prospective new home buyers.

According to the Office of National Statistics, the number of 25-34 year olds who own their own homes has fallen from 2 million to 1.3 million within the last decade. Out of 23.4 million homes, 15 million (64 per cent) are owner occupied, with 8.3 million (36 per cent) now rented

There is still strong demand for rentals amongst young professionals and couples struggling to get on the housing ladder and many of them are renting right up to their early 30’s, which is now the average age of first time buyers.

Today’s tenants have a different life and set of expectations to those in the last century. Although often criticised, housing stock in the rental sector has improved dramatically – particularly since the ‘credit crunch’ of 2008 when Belvoir first started to analyse the ups and down of the UK rental market.

Looking forward at buy to let over the remainder of 2013, it is possible that, for the first time in 5 years, investors may now start to see long term capital gains in their properties – as well as achieving healthy yields – on the right kind of properties, in the right locations. In some areas a gross yield of between 8 and 10 per cent can be achieved but, of course, there are costs to be taken into account. As a general guide, landlords are likely to need to invest annually up to one per cent of the property’s value, to maintain it to a high standard. Our research suggests that by doing this, they will meet the ever growing expectations of a discerning tenant market.

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