In the last blog, I covered some of the positive stories that are around at the moment about the rental sector. This blog is a little more of the same with a bit more focus on the rental returns aspect of things which, let’s face it, is the most vital part for any landlord.

LSL Services, which owns the UK’s largest lettings agent network, puts the improvement in rental returns in the UK at 13 percent over the last twelve months. It now puts the average rent in Britain at £669.

One of the things that LSL attributes this to is the number of first time buyers who are being turned away by the banks’ new lending policies. It estimates that a staggering two hundred thousand of these have become renters when before they would be in their own houses. This increased demand has allowed landlords to put a fair price on their rental properties.

All of this good news has resulted in a feeling of optimism in a lot of landlords, with surveys showing that fourteen percent of us are expecting to add to our portfolios over the next two to three months.

Looking at it from the point of view that this purchasing will promote growth, it is easy to think that things really do look quite rosy in our sector, but should all this good news be tempered with a bit of caution? According to some experts it should.

I will look at what they have to say in the next blog.

As I said in my last blog, I am a bit of an optimist myself so I am going to start this series off by looking at some of the good news that abounds about the property sector and where it is heading.

There have been a lot of positive murmurs coming from the buy to let sector over the last month or so and we should be encouraged by this. One thing that I’ve learned from economics 101, is that positivity breeds positivity.

According to property portal findaproperty.com, things improved dramatically for long term landlords in September and October when ‘accidental landlords’ finally decided it was time to sell up and the stock of available rental property dropped by ten percent. This clearing of the glut of properties up for rent allowed a lot of landlords to return to the fair asking price they had been forced to drop because of the oversupply of housing.  There is no denying this is excellent news for landlords, not to mention the relief for the ‘accidental landlords’ who had no desire to be involved in the rental market in the first place.

Average rent also rose in the month of October, not by a lot but any rise is a step in the right direction. Further good news is that it rose for the sixth consecutive month, giving out strong signals that things may be beginning to stabilise in the market.

Finally, for this section, the average time that a property sits vacant has fallen. Properties are now rented in an average of 58 days. We all know that less vacant properties is excellent news for landlords.

There is further good news in the area of rental returns but I will cover that in the next blog.

Reports out this week indicate something most of us have known for a long time: the buy to let industry is in a crisis that is set to only get worse if banks continue to take the line they have recently adopted.
The crux of the matter is that enquiries regarding BTL properties have increased by fifty percent over the past year, while the number of deals available from banks has dropped by seventy percent. This is clearly causing major problems with supply and demand. Hannah-Mercedes Skenfield, Moneysupermarket mortgage channel manager has this to say on the situation

“Our figures show nearly ten per cent of those looking for a mortgage are looking for a buy-to-let mortgage, but the number of products has fallen by over two-thirds compared to this time last year,” she says.

“With significantly less products left on the market and high interest rates attached to those available, we could potentially have a ticking buy-to-let time bomb on our hands. The need for rental housing is increasing, but there may not be enough landlords available to cater for this demand.”

This really does seem to be a recipe for housing disaster and we can only hope that something gives soon in the banks attitude to help us avoid this crisis.

It seems that despite the fact the economy is now in recovery, according to most experts, landlords are still very worried about where they will be in a couple of years time. This is probably not surprising considering the attitude of the banks which has been well documented on this blog over the last month or so.

I suppose that if you are in a position where you need to negotiate some or all of your mortgages in the near future, you have a real reason to be concerned. Considering the fact that so many landlords have struggled through the previous eighteen months, it is understandable that the way banks are acting is making them extremely edgy.
 
They are also concerned about the plight of tenants, many of whom are still finding it hard to make ends meet. Clearly this is an issue for landlords as it will inevitably be linked to some rent arrears, which in turn will make it difficult for landlords to meet their commitments.

While I think caution is called for at this stage of the recovery process, landlords should be careful not to worry themselves into a difficult position. For example, as I have said before, keeping up with insurance payments is vital.

The news that landlords are finding it extremely hard to finance their ventures these days seems to still be the biggest news in the property sector at the moment. If you are a landlord with a sizable portfolio, the news is even worse as banks continue to show reluctance to lend to you.

Whatever the reason that you may be in talks with the bank, most of you are commenting that it is harder than it has ever been to get hold of the money you require. A full ninety percent of landlords have indicated to survey-takers that you found negotiations significantly more difficult this time than at any other.

When you take into account that products available to buy to let landlords fell by a truly mind boggling 95% over the last two years, this fact is hardly surprising but it is distinctly worrying. In an economy that is starting to show signs of recovery, it appears that buy to let landlords are getting a even more raw deal than anyone else, with residential loans being on completely the opposite track.

As people involved in the property rental sector, we can only hope that the banks wake up to themselves soon and give us a fair deal. Either that or that the Government intervenes to guide the banks in the right direction.