19 April 2008 / by Rachel Mason
Rents have fallen in some of the UK’s big cities as investors feel the pinch of oversupply, according to housing data specialist, Hometrack.
While many buy to let landlords are cashing in on the fate of potential first time buyers who cannot get mortgages and are forced to rent, others are struggling.
Hometrack has found that while rents have increased by around four per cent across the UK in the past year, with particularly large rises in central London, some of the country’s recently developed metropolitan areas have actually seen rents go down.
In Liverpool and Nottingham – cities that have recently seen a huge influx of housing development recently – rents have dropped by around 2 per cent.
Richard Donnell, head of research at Hometrack says that the rental market in places like Nottingham and Liverpool was never large enough to “soak up” the amount of buy to let flats that were built, which is why its no surprise that interest in the sector is waning.
The drop in rent will come as bad news for those investors that bought into the boom, because as well as a drop in rent; they will also see the value of their properties fall as the credit crunch bites harder into the UK housing market.
But it is not all doom and gloom for the buy to let market; overall rent values are up, and this has left many landlords feeling positive about the coming months.
According to buy to let mortgage specialist, Paragon Buy to Let Mortgages, a third of all landlords believe that tenant demand is currently experiencing rapid growth and a further 58 per cent believe that demand is currently strong and stable – just seven per cent say they think there has been a decline in tenant demand.
“Our landlords are optimistic about the level of demand from tenants,” explained John Heron, director of mortgages at Paragon.
“Young people are choosing to remain in rented accommodation for longer due to the uncertain housing market outlook. This is definitely placing pressure on the stock of private rented homes available.
“The shortfall of available rental properties is particularly felt in London and the South East because they’re hotspots for young professionals,” said Mr Heron, “increasingly this demographic either can’t afford, or don’t have the confidence, to commit to home purchase,” he concluded.
© Fair Investment Company Ltd