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News: UK rental activity reaches 11 year high

Fri, 23 Aug 13


“Levels of activity and growth across the rental market are unprecedented and showing no signs of slowing down,” commented Stephen Nation, head of lettings at Sequence, owners of Barnard Marcus, William H Brown, Fox & Sons and other leading brands.

“New rental contracts agreed have increased to record breaking levels this month which highlights just how much the market is expanding.”

Indeed, while the government’s Help to Buy scheme has encouraged first time buyers to join the property ladder, house prices and deposits are still preventing many from being able to purchase a home. As a result, generation rent continues to swell, with letting becoming an increasingly commonplace lifestyle.

Landlords are taking advantage of the situation, sparking a mini-buy to let boom. According to research by the Association of Residential Letting Agents, 39 per cent of members say that landlords are increasing their investments in the private rental sector - higher than the 30 per cent recorded three months ago.

The Bank of England’s recent decision to keep interest rates low until unemployment falls (a period that is expected to last for several years) has helped to make securing a loan easier. Buy to let lending in the second quarter of 2013 topped £5 billion, according to the Council of Mortgage Lenders - up by 19 per cent on last year and the highest level recorded in five years.

In London, the buy to let market has started to soften, according to Sequence, with the supply of rental accommodation growing by 8 per cent - ahead of the 5 per cent growth in new applicants.  This has seen rents flatten on a monthly basis, although rates remain 5 per cent higher annually.

For the rest of the UK, the opposite is true, with supply struggling to keep up with the number of tenants.

Indeed, in Padstow, Cornwall, locals have become priced out of their own housing market due to the proliferation of second home owners and seasonal landlords. Prime Minister David Cameron and his family visited the area this week for their summer holiday, but the tourist boom has seen many former residents move away, leaving a town full of strangers.

“People have followed the money and now there is no Padstow left,” retired plumber David Taylor told The Guardian.

One local estate agent added: “It’s almost impossible for local people to buy property. Even renting, most second-home owners would much rather rent out their property at £750 per week and use it when they want rather than get an assured tenancy for £750 per month.”

As the imbalance continues across the country, so too does the rise in renters - and landlords are not far behind.

Nation concludes: “Historically activity continues to increase until October, so we would expect more records to be broken next month.”


See also: UK Rents



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