RLA : RPI : Bright future forecast for rental market

News from the Residential Property Investor, the bi-monthly magazine for RLA members

other artilces from the June / July 2000 issue

Bright future forecast for rental market - June / July 2000

Both landlords and letting agents are taking an optimistic view of the future of the private rental market, according to recent survey results.

After questioning close to 700 landlords, buy to let finance specialist Paragon Mortgages found that eight out of ten expected to increase their property portfolio over the next five years some intending to double their investment.

Occupancy was high with 92.5 per cent of properties let, yielding a gross return of 11.7 per cent 6.7 per cent after running costs were deducted. Rents were anticipated to rise by an average of 2.3 per cent over the next year.

Half of landlords borrowed between 50 and 70 per cent of the purchase price of property with the average hovering around 50 per cent.

'These findings confirm the turnaround in confidence in the private rented sector since its low in 1989', commented Paragon Mortgages managing director John Heron.

Meanwhile the National Approved Lettings Scheme (NALS) has found that 89 per cent of letting agents questioned believe the letting industry will grow in the next five years. Reasons given include employee mobility, shortage of affordable housing, interest rate fears and the availability of buy to let finance.

Over 70 per cent of agents identified the Internet as a major source of information for landlords and tenants.

NALS is a Government backed Empty Homes Agency initiative designed, through insisting that letting agents who subscribe adhere to strict standards, to give owners of the estimated 250,000 empty homes in the country the confidence to enter the letting market. Generally agents may only belong to the scheme if a director, principal or partner is a member of one of the sponsoring professional bodies: the National Association of Estate Agents, the Incorporated Society of Valuers and Auctioneers, the Association of Residential Letting Agents, or the Royal Institution of Chartered Surveyors. Members there are currently about 3,000 regulated agents but also 10,000 who are not - must have professional indemnity insurance, a complaints procedure and, apart from housing association members, a clients' money protection scheme.

NALS was launched in January 1999. Findings of its survey were released as part of a recent 'consumer launch' of the scheme which included promotion of the NALS logo, publication of a tip sheet and launch of a website accessible via the NAEA website at www.naea.co.uk

other artilces from the June / July 2000 issue