ARLA - New Tenancies Stirred and Houses were Tops While Values and Rents Snoozed the Summer Away
Property values and rents in the Private Rented Sector snoozed the hot summer away and stayed broadly static during the three months to August. However, there has been a slight increase in the number of new tenancies arranged during a period that is traditionally quiet for rentals in most areas.
Across the country, the average increase in the number of new tenancies rose from 27.5 to 29 for each office. The increase was caused by a significant rise outside London and the South East, from an average for each office of 28.6 new tenancies to 32 new tenancies. In other areas the number of new tenancies rose only marginally. However, these increases were achieved during a period when, in most areas, the rental market is at its quietest.
In the rental market, Southerners generally are shown to be flat dwellers while elsewhere more people are renting houses. The figures show 41% renting houses in prime central London and the South East, compared to 61% in houses in the rest of the country.
Houses outside prime central London and the South East produced the highest rental returns at 5.9%. For houses in the South East the average was 5.2% and in prime central London it was 4.8%. However, the difference in returns on flats between the geographical areas was less marked. In prime central London returns averaged 5%, while in both the rest of the South East and all other parts of the country the returns reported were averaging 5.4%.
The survey shows that, on average, achievable rent levels have decreased marginally over the past six months. There continues to be a sizeable downturn in the rents achieved in the prime central London market and there is a smaller decline in the rest of the South East.
However, in the rest of the country the picture is brighter with between 31% and 51% saying that achievable rent levels for all types of property have increased. Average void periods have also remained broadly unchanged. This was reflected in prime central London where the average void has remained at 36 days, virtually unchanged for the whole of the past year. In the last three months, voids rose marginally in the South East, from an average of 27 to 28 days, and fell slightly in the rest of the country, from 28 days to 27.
This quarter, 55.3% of respondents said there were more properties than tenants compared to 55% in May. However, this overall stagnant situation hides an apparent improvement in prime central London where the number of respondents who think there is an oversupply of properties has fallen slightly from 79.6% to 77.4%. In the rest of the UK the picture is brightening too. The number believing there is an oversupply has also fallen from 40.1% to 37.2%.
The overall average number believing there is an oversupply has remained unchanged because the situation worsened in the South East. There, 55% of all offices responding believe there is an oversupply against 50.8% before.
Commenting on the August survey, John Crossley, Chairman of ARLA, said, "This latest survey continues to show Buy to Let opportunities for the private investor and it shows clearly that potential investor landlords should consider looking further afield. There is .Buy to Let activity all over the country that should be worth investigating."
However, Mr Crossley warned that, as with any investment market, there are pitfalls for the unwary, as well as opportunities for those who seek the right advice before making a long term investment.