Next year is likely to be a challenging time for property letting agents in the UK and perhaps even tougher than 2009, it is claimed.
In a downbeat forecast for the country’s private rented sector, the Association of Letting Agents is predicting that there is a danger rental arrears could lead to landlords defaulting on their mortgages.
There will though also be opportunities as demand will outstrip supply and the availability of lending begins to increase while house prices are still historically low, enabling timely investors to purchase properties for the buy to let market.
It also says that the residential rental market will continue to stabilise in 2010, with property oversupply decreasing due to reluctant landlords leaving the market. Evidence of increasing sales in certain areas seems to indicate this trend will continue.
‘As demand rises, in particular due to a lack of social housing, there will also be mounting pressure on the sector to provide good quality rental properties,’ says Ian Potter, operations manager at ARLA.
‘There has been little commitment from the Government thus far on economic measures to help the wider industry meet property demand but increasing demand should have a positive effect on the sector, creating opportunities for new and existing investors and driving standards up,’ he added.
He warned though that should unemployment continue to rise, putting pressure on tenants’ financial stability, many will not be able to pay their rent. While ARLA research has shown that the number of tenants struggling to meet rental payments dropped towards the end of 2009, other research shows it is still a problem that has a knock on effect across the sector.
At the other end of the supply chain, landlords who default on their mortgage put their tenants at risk. The Government has already indicated a move to support tenants’ rights in this situation and may pass a Private Members Bill for reform in the first half of 2010.
‘Mortgage defaulting is a problem that will not go away in a hurry, and we have long emphasized the importance of careful selection of both tenants and landlords to ARLA members, as well as the implementation of contracts and agreements,’ said Potter.
‘The Government’s proposed changes to improve standards should go a long way in increasing the desirability of the sector to tenants as a choice of tenure. However, when the Government implements these changes it needs to ensure that they are fair on all parties in the transaction; landlord, tenant, agent and lender,’ he added.