Lettings agent chain, Belvoir, have urged landlords to be more realistic with rental prices and predict that there will be a moderate rise in rent this year.
Dorian Gonsalves, Managing Director of Belvoir Lettings, says: “I predict that rents will rise moderately, remaining more or less in line with inflation and salary increases.
“The Belvoir rental index, which records monthly and annual rents across Belvoir’s 140-plus UK offices, shows that rental fluctuation is very regional and this is likely to continue throughout 2012, with some areas such as the South East likely to see a higher increase, as rental prices force people out of London into the home counties.”1
Regarding other areas of the UK, Gonsalves predicts: “I think rents will be relatively stable and increases are likely to be very modest.
Landlords should be realistic, and it is worth noting that, according to the Belvoir rental index, many areas have still not recovered to the level of rents that were being achieved in 2008.”
Landlords looking to let out their properties now need to be flexible on rent and consider reducing current prices by 15% to 20%, this will help to avoid the unwanted position of having an unlet property, says Lynn Hilton, partner for residential lettings at Cluttons.2
Gonsalves continued his forecast: “I predict that increased rents and stable or decreasing house prices will result in increased rental yields in 2012. However, this is clearly very dependent on the outcome of the Eurozone crisis and its impact on credit and borrowing.
“The current crisis is making consumers nervous, which will affect both the buy-to-let and wider mortgage market.”
More and more cost-conscious tenants are renegotiating on new agreements or renewals, and are using the wider choice of rental properties as a bargaining tool.
However, Gonsalves does expect the recent trend of double renting to continue. “A recent phenomenon noted by Belvoir agents across the country is where home owners who are struggling to sell are now letting out their existing home to provide an ongoing income stream, and then moving to another lower-cost rental property,” he explains.
“Double renting helps to avoid the stamp duty and legal costs that are associated with buying and selling, and enables home owners to remain invested in the property market until the situation improves and they can sell at a profit,” he adds.
Gonsalves predicts: “I believe that for reasons of flexibility, mobility and budget, 2012 will see a shift towards more people viewing renting as a preferred lifestyle choice, rather than a necessity.
“By renting a property, people are able to plan their spending much more accurately and have the flexibility to follow job offers, etc. These factors are becoming increasingly important, particularly in the current financial climate.”
1 http://www.justlandlords.co.uk/news/Landlords-need-to-be-Realistic-about-Rent-1073.html
2 http://www.propertywire.com/news/europe/london-property-rentals-market-201211287192.html