Landlords set to win big in 2012 according to expert landlord James Davis
2012 offers a wealth of opportunity for the UK Buy-to-Let market according to James Davis, residential landlord for over 12 years and CEO of self-service lettings agency, UPAD. With rents rising across England and Wales by 3.5% (Jan – Nov 2011) according to the LSL Buy-to-Let Index, James explains why savvy landlords are gearing up to take advantage of this year’s lucrative opportunities.
Rents will continue to rise
“We believe there will be a modest 2 – 5% increase in rents outside of London, while in London rents will hike up by around 5 – 10%, propelled by events such as the London Olympic Games. Indeed, there will almost certainly be a ‘renter swell’ and we will soon forget the meaning of a ‘first time buyer’.
Farewell to the First Time Buyer
“There are a number of things we predict to arise in the UK Buy-to-Let market in 2012 namely that we will see first time buyers struggling to get on the ladder even with a deposit as banks will require an ‘uber’ credit rating, despite lending at 6%+.
“In addition, we also estimate that interest rates will stay at around 0.5% then fall lower by Q3 while the not unlikely collapse of the EU in Q2 will force banks to shut up shop as they won’t have cash reserves to lend.
“However on the flip side, most landlords do have cash reserves, pensions, savings and equity in the homes they have access to and falling house prices next year will mean that those with cash will be able to snap up good deals from distressed sellers.”
It won’t all be plain sailing for landlords
“We forecast a number of issues that are likely to affect landlords this year including tenants potentially defaulting on their rents as costs of living rise. Rents are likely to be paid in arrears particularly from Housing Benefit Tenants.
“There will also be rising finance from banks that will create a tougher operating environment for landlords as well as tougher choices when choosing tenants.”
How will tenants fare in 2012?
“One off the biggest issues here will of course be rising rents and lack of housing stock. With no salary rises on the table for 2012 and higher living costs, tenants will have to start to downgrade. We may see a large number of people in London having to move out of zone 2 to more affordable areas.
“Additionally, having to supplement their housing benefit contributions as of January 2012, we are likely to see the real effects of the Government capping coming into play for these tenants. While this will create real problems for those who will no longer be able to afford to rent in London, there will be options to move to cheaper areas in the UK. Several London Boroughs have done deals with cheaper areas across the UK such as Swansea, to house their social tenants.
“While there will be increases in credit checking given issues in the economy, a general ‘nervousness’ will be felt by landlords who will require additional comfort while tenants will also need to pay higher deposits with rent payable up front becoming common place.”
2012: The year of online lettings
“This sector has grown five fold in last 18 months and we estimate that online lettings will double by the end of 2012. Indeed, UPAD has experienced a boom in online lettings thanks to resurgence in the UK rental market. Over the last 18 months alone we have seen a huge increase in the number of rental properties listed through online agents from around 500 in April 2010 to 2,600 in October 2011.
“Meanwhile, awareness for online lettings will continue to grow among landlords as they realise that there is a better way to self-manage, replace classifieds and save money on agent commissions and ongoing management costs.
“As recognised suppliers of the National Landlords Association and licensed member of the Association of Residential Lettings Agents, UPAD in 2012, will continue to revolutionize the world of lettings, extolling the virtues of self-service online letting from as little as £99 + VAT.”
For more 2012 predictions from the online lettings experts UPAD, please contact the team on 0333 240 1220 or visit www.upad.co.uk.