Rental demand increases

There is now little doubt that encouraging signs are cropping up all over the property sector. The rental sector is beginning to look especially encouraging.

Recently there have been a surplus of properties to rent. But the demand for rental properties is increasing rapidly. There are a number of reasons for this.

One is that repossessions are rising so the pressure on social housing is increasing. There is not enough social housing so rented properties are coming into play. A massive 67,000 repossessions are predicted for this year.

Another factor is that first time buyers still cannot get on the property ladder because they have insufficient monies for the chunky deposits demanded by the majority of lenders.

Again, frustrated buyers are choosing to rent while they save for a big enough deposit to buy their first home.

Life could get even tougher if 100 per cent mortgages are definitely going to be banned by the Financial Services Agency and if mortgages are going to be restricted ??â??â?? as in the distant past ??â??â?? to three times a borrower??â??â??s income.

Grainger, which is the UK??â??â??s largest residential landlord with a portfolio of 14,000 tenanted properties, will be letting a third of its new flats on the Hornsey Road, in north London, with rents starting at about ??Â?220 a week.

Developers are choosing to let their properties rather than selling them ??â??â?? for some of them, of course, it is a last resort ??â??â?? but for the first time in more than two years landlords are buying more homes than they are selling.

A number of surveys have suggested that in ten years time one in five homes in the UK will need to be in the rental sector to meet demand.

It is likely that housing patterns are shifting in the UK. House ownership in Britain was falling even before the Great Crash, partly, a tendency quickened by the sudden boom in prices which caused the lower end of the market ??â??â?? that for first-time buyers ??â??â?? to stall.

But the UK still has the second highest percentage of owner occupied properties in Europe at almost 69 per cent. Spain is the highest, with 82 per cent. Germany has only 43 per cent.

In Germany ??â??â?? when people first buy they are likely to be aged in their forties. One reason is that German property is very expensive.

But in Britain it is still seen as the norm for twenty-somethings to get on the property ladder, something which will become rarer in the UK over the coming years.

It is widely predicted that now, in the UK, with the demand for big deposits, restrictions on the amounts of money which will be lent, and deep-seated fears about job security ??â??â?? 3000 people a week in Britain are still losing their jobs ??â??â?? the age at which the average British person will get on to the property ladder will rise to between thirty and forty.

If the British rental market begins to mirror the German market, for instance, there could be some seismic changes in the relationship between landlords and tenants.

In Germany the majority of landlords are small operators with small portfolios. As an incentive they are given tax breaks by the government to encourage them as buy to let landlords. It is something which any UK administration would be wise to consider, although given the parlous state of the economy any tax giveaways would seem unlikely.
Germany also allows tenants to negotiate lower rents the longer they stay in a property.