Buy-to-let market recovering

Nia Williams

August 6, 2009

This is being caused by a correction in the over supply of rental properties, which the buy-to-let market has witnessed over the past year.

Graham Kinnear, MD at Landlord Assist, states that some of the excess supply of property, caused by so-called ‘accidental landlords’ reluctantly entering the market because they were unable to sell, has reduced significantly. This is helping to balance out the supply and demand within the rental market.

The number of properties available to rent between May 2008 and May 2009 doubled as people elected to rent out instead of sell. However, the latest figures confirm that the number of available properties on the rental market has begun to stabilise.

“In the last couple of months we have seen evidence of shoots of recovery in the buy-to-let market,” says Kinnear. “Indeed many of our agent clients are reporting that reluctant landlords are returning to a sales market that is at last showing signs of life.”

Landlord Assist comments that rental income tumbled over the last 12 months on the back of over supply, which severely impacted landlords’ cashflow. Recent figures suggest that these falls have now stopped and that rent rises may soon be seen again.

Recent research suggests that the average rent is now £649 per month and that yields are on the increase too. According to property firm, LSL, the average yield is now back over 5% again, indicating that people may prefer to have their money back in buy-to-let rather than in the banks.

However, with the increase of lettings comes the increase in tenant defaults and Stephen Parry of Landlord Assist is only too aware of the situation. He said: “We have seen almost a 100% increase in the number of cases that we are taking on although, encouragingly, the number of non paying tenants citing redundancy as their reason has declined over the last two consecutive months.”

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