Legal 4 Landlords Predict Stable PRS Growth

Latest landlord News by: Madalena Penny

2011 is yet to see the entire role, which will be placed on the private rented sector.  A report by the National Housing Federation, who represents national Housing Associations, shows a bleak picture of social housing and affordable home-ownership.

The ‘Home Truths 2010’ report has revealed that house-building levels are now lower than at any time since the 1920’s.  It further states that the housing market remains unaffordable, with the average home costing over 10 times meridian incomes.  Resulting in a shortfall of affordable housing, the report places much emphasis on the private rented sector to fill the gap in what is now considered a housing crisis.

Landlords are witnessing some fluctuations within the market, but nothing significantly concerning any negativity.  LSL’s rental index may have shown some decline in rents in January, but again some falls are expected in December and January, when tenants are less likely to look for accommodation resulting in landlords avoiding voids and reducing rents.  Despite the drop in rental value last month, rents, according to David Brown, estate agency managing director of LSL are still ‘£26pcm higher than last January’.

Research monitored by ‘Legal 4 Landlords’ reveals further evidence supporting the vital growth of the private rented sector indicated via the development of the buy-to-let products that are emerging on the market.  The buy-to let market grew considerably in contrast to consumer mortgages in 2010.  The Council of Mortgage Lenders (CML) reported a market growth of 7% in 2010, compared to 2009.  Property investors and landlords are seeing enhanced products created to facilitate expanding portfolios along with new investment in the sector.

Regardless of interest rate rises and housing benefit caps predicted to slow the growth, surface analysis may show some instability but the foundations have already been set by a stagnant housing market, unrealistic mortgages and a severe lack of available housing, which have lead to a massive growth in tenant-demand.  As this year adapts to the changes, the PRS will find it’s level and grow and adapt from this point.  As a long-term investment, buy-to-let is set to be one of the few growth industries that will expand despite government policies and economic reform and changes.

As a nation and a generation time is needed to adapt to a new mindset, primarily one of renting as opposed to home-ownership.  Europe, Australia and the USA have not been hindered in the same way with the British obsession with property ownership and as a result enjoy a stable rental market.