Tenant Demand Continues to Grow in the Private Rented Sector

25/12/2011 22:15

Tenant Demand Continues to Grow in the Private Rented Sector

LONDON, July 6 /PRNewswire/ -- For the second quarter running, tenant demand in the Private Rented Sector is increasing. This is reflected in the decrease in available rental stock and the increase in the number of new tenancies arranged by ARLA member letting agents. Void periods are down while rental returns have been maintained. These results are shown in the second quarter ARLA members survey published today. The ARLA Review and Index which includes the ARLA Investor Landlord Survey, conducted at the same time, shows that only 2.7% among Buy to Let investors expect to sell their properties if property prices fall while 59% expect to buy further investment properties in the next twelve months. Investor landlords remain committed to the long term, with the life expectancy of their investments averaging 16 years. Nearly half of these investors (45.8%) are aiming to create a 'Nest Egg' for the future and 43.2% hope to benefit from both rental income and capital gain. A mere 3.5% admitted to hoping for short-term capital gain and 7.5% have invested for income. Commented Chairman Robert Jordan, announcing these results, "These figures clearly demonstrate that the Buy to Let investor has become a stable fixture of the Private Rental Sector. What is good for the rental market is also good for the investor landlord." The ARLA members survey is the largest of its kind in the Private Rented Sector and the investor landlord survey is drawn from among the 8,000 subscribers to the ARLA Buy to Let website. The research is backed by the ARLA panel of mortgage lenders: Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and The Mortgage Business. The ARLA Buy to Let Index for the quarter stands at 99.6 for cash purchases and 98.2 for geared investments. (Quarter 3 2002 equals 100). Annual rates of return on the cash purchase of a Buy to Let investment over five years show an average of 11.12% for all regions. The rates of return on geared investments for all regions average 22.77%. During the second quarter of this year, capital asset values have risen substantially. In three months, the overall weighted average value of rented houses has risen from GBP331,300 to GBP338,000, (2%). The average value of rented flats has risen from GBP202,400 to GBP211,8000, (4.7%). The average weighted rental return on a house is unchanged from the first quarter at 5.1% while the average return on a rented flat has fallen marginally from 5.4% to 5.3%. Average void periods are down over the quarter, from 31 to 29 days a year, and it took 5.9 visits by prospective tenants to achieve a let this quarter, compared to 6.5 visits in the previous quarter. The average number of new tenancies arranged through ARLA member agents was up by 6.9% on the previous quarter. Investor landlords report that 55.4% of all their tenants are employed, 8.9% self-employed, 15.4% are students and 14% are benefit recipients. Said Robert Jordan, "It is obvious that the endless rumours about the housing market have no effect on the long term planning of the Buy to Let investor. They are there for the long term and recognise that should house prices soften, or even fall, the rental market is contra-cyclical and will gain from a rising tenant demand." The full details of the quarterly ARLA members survey and ARLA Review and Index are available on http://www.arla.co.uk
http://www.prnewswire.co.uk/cgi/news/release?id=126110 Page 1 of 2

Tenant Demand Continues to Grow in the Private Rented Sector

25/12/2011 22:15

Editors Note: ARLA surveys its member letting agents every quarter. The average response is between 450 and 500, making this survey the largest and most informed of its kind in the Private Rented Sector. At the same time, subscribing investor landlords are invited to respond to a website questionnaire over the period of a month. This release can be downloaded from the ARLA website. Surveys and the ARLA Review and Index are available in PDF files shown alongside the releases.
Distributed by PR Newswire on behalf of ARLA
PR Newswire Europe Ltd. 209 - 215 Blackfriars Road, London, SE1 8NL Tel : +44 (0)20 7490 8111 Fax : +44 (0)20 7490 1255 E-mail : info@prnewswire.co.uk

Copyright 2011 PR Newswire Europe Limited. All rights reserved. A UBM plc Company. Terms and conditions of use apply.

http://www.prnewswire.co.uk/cgi/news/release?id=126110

Page 2 of 2