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Rents to Rise

Tenant demand for accommodation has risen partly due to the higher house prices and interest rates. The second quarter of 2007 saw new landlord instructions rise steeply and more surveyors reported rises in residential lettings.

Surveyors are expecting rents to see record growth rates in the next few months. Flats are expected to be popular with would-be first time buyers unable or unwilling to buy at present.

The rent rises have helped landlords who have found borrowing costs high.

It is possible that the buy to let market may struggle in 2008 with lenders being more cautious especially with sub-prime properties. Rents Surge 40%

The total of rental receipts in the UK went up 40% in September, which is the typically high of the renewal season.

The rents across the country are keeping up with London where average rents rose 15%.

Much of the regional rise was because of the recent floods and many of those affected having to move into rental accommodation. Also purchasing chains were broken in many of these areas at this time.

The 40% included agreements for September rent rises with many tenants signing up for two years. Rental renewals fell in September with landlords re-letting rather than re-negotiating with present tenants.

Investors relying on capital gains may find it difficult to make figures add up. Those with few properties and big leveraged properties would be vulnerable to borrowing costs.