Lending will be the key issue for buy to let property investors in the UK in 2010 but rising interest rates could also put pressure on the industry, according to predictions.
‘From a lettings point of view, much of what will happen next year will be governed by borrowing ability. Interest rates will not change in the first half of the year. However, when they do start to rise again, maybe in the middle part of 2010, then it will have an effect on the lettings industry,’ said Caroline Kavanagh, Group Lettings Director of Badger Holdings, parent company to Townends & Regents estate agents.
‘For anyone looking to upsize, for example, it could prevent them from being able to move out of their current property and rent it out rather than sell it,’ she added.
One result could be a squeeze instruction numbers. ‘We have already seen it happen in the last couple of months,’ she pointed out. But on the other hand, it could also encourage more people to look at renting. ‘It will certainly sway people into deciding to stay in their current rental property whilst they hold out to see what will happen to the sales market. This increase in demand should bring with it stable rents and we may see these level out. As we know, these came down significantly this year, but already we are seeing prime locations benefit from better rents,’ added Kavanagh.
She urges landlords to be more open minded as unemployment remains challenging and some tenants may well be in a position where they do not have a spotless credit history. ‘This does not mean that tenants will necessarily be a higher risk but extra safeguarding measures can be put into place to give extra peace of mind,’ she explained.
She believes that the outlook for 2010 is a good one. ‘We will continue to see a positive rental market, even if there are not as many new properties coming to the market. We may see more agents, ones who started to dabble in lettings when the sales market first turned, either giving up or landlords will find an alternative agent.
‘We will most certainly continue to see more sharers, especially those who are renting for the first time, in order to spread the cost. I do not think that the election will necessarily have a direct impact on the lettings industry,’ she concluded.