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More stubborn sellers with luxury homes who refuse to drop their house prices are becoming reluctant landlords, according to letting agents.
Their reluctance to sell is pushing up the average value of a buy to let property.
Values soared by 11.6% from £401,400 to £447,900 in the three months ending February 28, says research by the Association of Residential Letting Agents (ARLA).
The figure was showing a steady decline since the last peak at £442,600 in 2007.
The average house price now is £222,146 compared with £218,278 in February 2007, calculated from Land Registry house sales data compiled by researchers Acadametrics.
The ARLA research reveals London and the South East drove growth, with a 14.8% increase in average capital value in central London and 16.2% in the rest of the South East.
The rest of the UK experienced a drop (5.2%).
According to ARLA, this growth is due to an increase in family homes coming onto the rental market, which generally carry a higher value than smaller homes.
Ian Potter, operations manager of ARLA, said: “We believe that this increase in the overall average capital value of rental properties has been driven by different types of home being offered to let. Today’s housing climate and uncertainty around jobs and income means many people are choosing to let rather sell their home, causing an increase in the number of family-sized homes available to rent.”
Around 1 in 4 ARLA members reported an increase in property coming to the buy to let market because it could not be sold. Most of the homes were detached or semi-detached family homes.
Rental flats also showed tracked the housing trend, with average values increasing from £258,500 to £267,400 (3.4% up). This was mainly in Central London (4.7%) and the South East (4.4%), with a 1.7% drop in the elsewhere.
“While these changes do not necessarily mean individual properties are worth more money, they do indicate that there is increasing flexibility in terms of the types of property available to would-be tenants in the PRS,” said Potter.
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