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Despite demand landlord expect low rent increases in 2015
By Simon Thompson |
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Despite the growing demand from a large number of people looking for rental properties in the UK, the potential for large rent increases are 'muted' according to one firm.
Belvoir Lettings has carried out an analysis of the market and found that the uncertainty about the General Election outcome, as well as questions over when interest rates will rise, will lead to static or low rent increases this year.
The firm says that the forecast for economic growth continues to look gloomy and people continuing to have low disposable incomes will also play a major part in pushing down rent increases.
Little or no growth in rent
The director of Belvoir's commercial and franchising, Dorian Gonsalves, said: “On average, Belvoir offices have seen little or no growth in rents after seven years bit there have been rises and falls in this period.”
The firm's review has revealed that rents in the UK haven't changed by much since 2008 when they began tracking the market.
The firm says that in March 2008 average rents were £698 per month and these fell to an average of £678 a year later. The figures show that rents remained level around this point until they rose slightly to £691 in 2014.
The findings are backed up by a survey from the Residential Landlords’ Association that rents have fallen in real terms since 2008.
New landlords to enter BTL market
Another finding from the research is that the buy to let sector is set to get a massive boost in April 2015 as new landlords enter the sector following pension reforms.
Belvoir also believe that the sector will see continued growth in property prices and a slight increase in rents though they warn that interest rate rises will bring higher costs.
With new entrants entering the buy to let sector in the UK means there will be an increase in supply which will match demand and put pressure on returns that landlords can expect.
Mr Gonsalves warned: “It's bizarre there is rhetoric about people cashing in pensions to spend on cars or property but rental income should not be viewed as a pension income replacement because the two are very different.”
Public consultation on Croydon's licensing scheme expands
Meanwhile, a plan by Croydon Council for the introduction of a landlords’ licensing scheme in the borough has been extended to its neighbouring boroughs.
The council announced it was beginning a ten-week consultation following a High Court ruling two weeks ago against Enfield Council's controversial landlord scheme.
In the landmark judgement, the judge said Enfield's scheme should have consulted with its neighbouring local authorities before pushing ahead with the project.
The judgement means that Croydon is now consulting with businesses and residents in Bromley, Southwark, Lambeth, Sutton, Merton, Wandsworth, Lewisham, Banstead, Tandridge and Reigate.
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