Residential lettings market in and around London outlook for 2013
|Friday, 21 December 2012|
Rents in and around London have peaked and location and the condition of a property are likely to be the most important considerations for tenants in 2013, it is claimed.
Also according to Caroline Kavanagh, managing director of Townends Lettings and Management who operate primarily in London, Surrey, Middlesex and North Hampshire, the growth of accidental landlords is expected to slow.
The end of last year saw an increase in the number of people becoming professional landlords because they wanted to or needed to move and could not sell their property because of the sluggish residential market.
At the beginning of 2012 a spring lift in residential sales encouraged some accidental landlords to test their properties on the sales market, but this brief stint was followed by a fair few returning to lettings only a few months later, Kavanagh explained.
Now as 2012 comes to an end she believes that the benefits of becoming a professional landlord in the south of England are increasingly apparent and outweighing any desire to sell. As a result, it's unlikely we will see an influx rushing to sell next year but rather decisions will be based on individual circumstances. Equally, its unlikely there will be a further flurry of accidental landlords as we appear, for now, to have reached a new norm in an overall more stable sales market,ђ she said.
She pointed out that the high demand and lack of stock which, over the past 18 months, has forced rapid rent rises in the areas within which we operate, ranging from between 10% and 30%, were simply not sustainable.
Rents now appear to have peaked for the time being as a steadier number of instructions make tenants feel more inclined to consider the options out there, although this has left some landlords' rental expectations for continual rises in the New Year, a little out of kilter,ђ she said.
As we move through 2013, key elements such as price versus location versus property condition will drive the market, and as affordability continues to impact tenants we will see even more taking an open minded approach to making a sideways move in order to find something cheaper or avoid a rise,ђ explained Kavanagh.
It will be the shrewd landlords that are flexible enough to avoid driving their tenants out, but rather adapt with local market conditions, that do well. Frugality continues to be the underlying factor for both tenants and landlords wanting more for their money. Landlords have become more in tune with what to expect from their agent and as well as being about the quality of service provided, landlords also want a guarantee for the quality of tenant that agent will supply. This will have an increasingly positive impact on the market next year, encouraging those that are good at what they do to raise the bar even further, subsequently benefitting tenants,ђ she added.
Overall she expects 2013 to remain a positive time to be a landlord. We anticipate seeing many existing landlords re-investing and widening their portfolios. It's possible these more stable rent levels could be sustained throughout much of 2013, with the exception of pockets of the market which consistently outperform others,ђ she said.
Tenants will also remain in an increasingly advantageous position as the Association of Residential Lettings Agents continues to put pressure on the government to regulate the industry in order to protect tenants' welfare. Existing policies will continue to be strengthened forcing landlords to be ever more professional and demonstrating to tenants the importance of using an ARLA or TPO registered agent,ђ she added.
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