Letting agents ‘overstating rental returns by 25 per cent’

Ramesh Sharma

June 1, 2004

Researchers posed first as a tenant then a potential property investor and enquired as to how much a two-bedroom flat in specific developments could be rented for.

London and Birmingham boasted the most inflated prices with 25 per cent and 13 per cent respectively. However, letting agents in Manchester and Liverpool massively under-quoted potential rental returns by 25 and 15 per cent respectively. Sheffield agents were the most honest, quoting the same figure to both tenant and investor.

Overall the trend is for agents to quote approximately the same to both class of caller compared to an overstatement of 8.5 per cent in 2004. Landlord Mortgages said this indicated a more cautious approach taken by letting agents brought on by increased competition to find rental properties.

Lee Grandin, managing director of Landlord Mortgages, said: “These results show it is still crucially imp-ortant for landlords to thoroughly research prospective properties before making any purchasing decisions. By relying purely on the advice of letting agents some investors may be facing a serious rent shortfall or even be put off a perfectly good property by an overly- pessimistic assessment.”

Barbara Goldsmith, managing director of Stratford Properties, agreed that care is needed. “I would suggest investors get three different opinions on a property and then draw conclusions from the results,” she said.

“Other feedback indicates extra features such as allocated parking can really boost the expected rental income as more people will be tempted to move away from city centres. Investors who thoroughly research their potential investment looking for features such as these can expect higher rental income and fewer void periods.”

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