Improvements to the sales market resulted in a dip in supply of rental properties towards the end of last year, but Waterfords lettings department says that attractive yields and potential capital appreciation are encouraging landlords to expand their portfolio.
‘Improvements to the sales market did impact the supply of rental properties in the fourth quarter of 2014 as those who became accidental landlords during the downturn chose to sell up and take advantage of more favourable market conditions,’ said Brendan Cox, managing director at Waterfords estate agents.
But he explained that this has started to be offset during the first months of 2014 by a surge of investors looking to enter the buy to let market for the first time or grow their existing portfolio.
‘We are experiencing a large number of buyers viewing properties and subsequently enquiring about letting them the same day. It would seem rising house prices are once again encouraging investment,’ he said.
Rents are still 8% higher than this time last year, however, it's likely that the increased investment in buy to let properties will soon filter through to benefit tenants by helping improve supply and stabilise rents, whilst providing a greater level of choice in properties.
Despite the upturn in sales off the back of improved mortgage lending, which would historically lead to adjustments in rental demand, applicant levels for good quality rental properties across Surrey and Hampshire remain strong with tenant enquiries outstripping available stock 10 to one, the firm has found.
‘This is partly due to higher property prices, which means the amount needed for even a 5% deposit is increasing, meaning purchasing is still well beyond the reach of many,’ said Cox.
‘However, I think as a nation we have also adapted and renting is much more the norm nowadays. The flexibility and convenience it offers enables the likes of young professionals to follow job opportunities and families to secure desirable school places for their children, without the expense and responsibility of home ownership,’ he pointed out.
Waterfords says there is a rise in the number of older tenants entering the rental market for the first time, notably those that don't require a retirement residence, but who wish to release the capital on the property they own.
‘Lifestyle changes mean there is a much greater diversity of people opting to rent nowadays, and this shift in living arrangements is reflected in the change of demand for property type,’ said Cox.
‘Previously one and two bedroom properties were in greatest demand, whereas now there is interest across the board, from one bed apartments right through to larger five bedroom family homes. We are experiencing particularly high demand for three bedroom homes at present,’ he concluded.
