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London property lettings market set to be fragile in 2009

The lettings property market is likely to remain fragile in the coming months and landlords are also likely to be it by more tenants defaulting on their payments, according to analysis from Kingleigh Folkard & Hayward, which has branches through the city.

Judienne Wood, lettings director at Kinleigh Folkard & Hayward, also warned landlords to be cautious about cheap deals being offered by lettings agents as an increasing number of estate agents turn to lettings.

'In the first six months of this year, we recorded rental rises of just 2% in our branches across London. Due to the current economic climate, we have seen a shift in supply and demand, with the supply of properties to let starting to outweigh demand from tenants,' she said.

'In 2009 the lettings market will remain fragile. We will continue to see a fall in tenants registering as most will not move unless they really need to. Our stock levels are likely to rise as more would-be sellers rent out their home and canny investors will buy investment properties cheaply to rent out. As such, there will be a greater choice for tenants and the supply/demand ratio will increase,' she predicted.

'It is inevitable that more tenants will default on their monthly payments as there is no sign of a brightening sky on the horizon of the economic climate and unemployment is rising. There is insurance to cover this eventuality and my advice to landlords is to make sure they are covered,' she added.

And she warned that the increasing number of estate agents turning to the lettings market and offering cheap deals was not necessarily a good thing. 'You get what you pay for. Low fees are unsustainable without cutting corners,' she warned.

However Wood said that there would always be a demand for properties in London which she said would weather an economic downturn better than other areas. She also said the student lettings market was 'recession proof'.

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