RLA : RPI : New markets

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

other artilces from the June / July 2000 issue

New markets - June / July 2000

A major letting opportunity for residential property investors has arisen due to the Government's asylum seekers dispersal initiative. It is estimated that it could lead to demand for up to 60,000 bedspaces.

Due to the poor administration of housing benefit, alternative markets are bound to prove attractive to landlords. Market rents and up to five year leases are being offered by some accommodation providers. In one area, over 1,000 bedspaces were contracted from private landlords in three weeks.

However, there is great concern at the way some of the accommodation providers are subcontracting out the provision of services and the acquisition and management of properties to letting agents that have not been properly vetted as to their character, their viability or their ability to manage.

There is also concern at the terms of the agreements being offered to landlords. The Government classes asylum seekers as a vulnerable group and insurers are indicating that they are a greater risk. Landlords must examine all the issues and take professional advice before signing such agreements.

The private sector is often accused of failing to provide long term tenancy agreements and of not supplying and managing property to a suitable standard. This is primarily by people who do not understand the basic necessities of a successful investment.

This new market creates a platform for the private sector to show that it can provide good quality accommodation on long term leases when it is offered rents at market levels and contracts that are enforceable. It will be interesting to see how it pans out.

Martin J Moylan

other artilces from the June / July 2000 issue