THIS year could be the year in which property renting becomes the new owning, according to one of the UK’s largest letting expert Belvoir.
Increasing consumer nervousness, rising levels of unemployment and a squeeze on peoples’ purchasing power triggered by a global downturn and the current Eurozone debt crisis are all factors which could make many turn their back on prospective home ownership, predicts the company.
‘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,’ says Dorian Gonsalves, Managing Director of Belvoir, which operates over 140 offices throughout the UK, including offices in Portsmouth and Waterlooville.
‘By renting a property people are able to plan their spending much more accurately and also have the flexibility to relocate and follow job offers. These factors are currently gaining increasing importance in the current financial climate.’
The number of house purchase transactions, nationally, is currently around half of those pre-credit crunch and with the very real prospect of continued reduced mortgage lending over the next year, demand from buyers is expected to remain low.
Experts predict that more and more housing stock will be turned over to the private residential property lettings sector, which is still experiencing solid rental yields, propped up by modestly increased levels of buy-to-let funding made available to professional landlords.
Belvoir predicts that rents will rise moderately, remaining more or less in line with inflation throughout the coming year.
‘Whilst there will be considerable regional variations, my view is that increased rents and stable or decreasing house prices will result in increased rental yields in 2012.
‘However, this is clearly dependent on the outcome of the Eurozone crisis, which is causing major upheaval in the financial markets supplying funding for both buy-to-let and mortgage lending,’ added Mr. Gonsalves.
In recent months Belvoir has noticed a number of new trends emerging from its nationwide portfolio of landlord and tenant clients.
Double renting is a new phenomenon – where homeowners who are struggling to sell are now letting out their existing home to provide extra income and moving to another lower cost rental property.
There is also growing evidence that in many areas of the UK larger builders have started to develop once dormant land sites, with a view to letting the properties, rather than attempt to sell them.
In addition, a trend towards longer lease rental agreements means that a rented home is, for many, no longer just a temporary, short term place to live.
Following the model set by their European counterparts, many UK tenants are now looking to make a rented property their long term home.
And with more and more families looking to rent rather than buy, this trend is predicted to continue throughout 2012 and beyond.
All of the indications are that this situation will continue to grow and gain momentum.
From a prospective landlord’s viewpoint, the current market still offers great opportunities.
‘But anyone looking to invest in buy-to-let in 2012 must, as always, have a clear strategy, since it is not a get rich quick scheme.
‘I believe that the lettings market will weather the storm of the current economic downturn and remain cautiously optimistic that we shall attract a healthy volume of business throughout 2012,’ Mr. added.