Agents report a buoyant UK residential lettings market

Demand for rental property continues, according to lettings members of the National Association of Estate Agents (NAEA).

The increase in Eastern European immigration, buoyant employment conditions and the demand from those who cannot afford to buy has contributed to a thriving rental market throughout most of the UK in the first quarter of 2007.

This has meant that landlords in many areas are able to achieve their desired rental yields despite the increase in the number of buy-to-let investors and property available to rent.

Young professionals pay a premium on rental properties

With affordability being a key issue for those looking to get on the property ladder, many young professionals are being forced to stay in rental properties for longer and are becoming increasingly willing to pay higher premiums in order to enjoy a better standard of living.

Jan Bartlett, lettings expert at the National Association of Estate Agents and principal at Premier Lettings, Oxford, comments: “A high percentage of buy-to-let investors purchase new-build properties, which attract higher than average rental yields due to their quality and desirability. Young professionals are prepared to pay a premium to rent new build property which they otherwise might not be able to afford. Technically, they get more for their money than if they paid a mortgage on the same property, as they don’t have to pay for maintenance or upkeep.”

Rents rise as interest rate rises take effect

Rents rose significantly in the first quarter of 2007, up an average of 1.77% compared to an increase of just 0.2% in the same period in 2006. The interest rate rises in November 2006 and January 2007 are likely to have had an impact on buy-to-let landlords who will have increased their rents to cover their additional outgoings.

Jan Bartlett comments: “The increase in rents is a reflection of interest rate rises, but it has not affected the market. Properties are being let at their full asking price, unlike 18 months ago when we often had to negotiate rents down. Economic and immigration factors continue to fuel demand, and we have also seen an increase in the number of young professionals relocating for employment, which fuels the rental market as people often rent before they buy when relocating.”

Time taken to let

The time taken to let a property was slightly less than the same time last year. The average number of days between tenancies in the first quarter of 2007 was 13, compared to 14 last year. This reflects the healthy rental market; people are taking less time to commit to a property as there is a high demand.