Buy to Let Arrears up – But ‘Experts’ Disagree on WhyMake Text Bigger
Buy to let experts are transmitting mixed messages about the state of the market in two new surveys.
The latest buy to let musings from the Association of Residential Letting Agents highlights the problem of sentiment surveys in the property market.
In a confused rambling, ARLA suggest the market ‘may be softening’ based on month-to-month market movements.
Meanwhile, the UK’s largest letting agent business, LSL Property Services, the firm behind Your Move and Reeds Rains, predicts continuing rent rises and high tenant demand.
ARLA says in the final three months of 2011, 55% of letting agents reckon the number of tenants looking for a home is more than the number of available rental properties, compared with 74% in the previous quarter.
Tim Hyatt, president of ARLA, sat on the fence and said: “The apparent drop in demand for rental properties could be due to the traditionally quite pre-Christmas period. At the same time, it could indicate a reversal of the surge of new tenants who turned to rent when they could not afford to buy.
“With household income decreasing and job uncertainty prevailing, it could be that increasing rental arrears is a sign that the wider economic malaise is having a tangible impact on personal finance – some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted.”
The only tangible result to come out of the ARLA research was a note that 39.2% of letting agents reported an increase in tenants struggling to pay their rent; up from 36.7% the previous quarter.
This is corroborated by the monthly buy to let survey from LSL Property Services.
The findings revealed rents slipped by a modest 0.8% to £711 in December from the previous month. For 20911, rents increased by 4%, reports the firm.
Arrears increased over Christmas with 10.7% of all rent unpaid or late in December.
David Brown, LSL Property Services commercial director was more bullish about the prospects for buy to let.
“The seasonal relief continued for tenants as rents dipped again in December, but the drop-off was much smaller than a year ago,” he said.
“The rental market was sheltered from the full impact of the seasonal lull by the strength of underlying tenant demand as many prospective renters took the opportunity to move in the run-up to Christmas at a time when the market is traditionally less competitive.
“With the mortgage market facing challenges from the eurozone crisis and the sluggish wider economy, credit conditions are unlikely to ease significantly in the coming year. As a result, the number of first-time buyers able to secure finance isn’t about to rocket up, and demand for the limited supply of rental accommodation will continue to rise. It won’t be long before rents will resume their upward march.”
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