Optimism in UK private rented sector at highest for four years

Market optimism increases

Private property landlords in the UK are at their most optimistic since 2007 as the latest national survey shows the majority believes the industry is positive despite a dismal economic outlook.

Some 65% of landlords surveyed rated prospects for their own lettings business over the next three months as very good or good, according to the National Landlords Association’s Landlord Optimism Index.

Landlords are also increasingly optimistic about the overall state of the private rented sector (PRS), with 54% rating the industry’s prospects as good or very good, an increase of 8% compared with the NLA’s findings during the second quarter of 2010.

However, landlords remain less certain about the state of the UK financial market with only 6% rating this positively, a decrease of 3% compared with the same time last year.

‘After a challenging few years, it is encouraging to hear that the majority of landlords are feeling positive about their lettings business and the overall state of the private rented sector,’ said David Salusbury, NLA chairman.

He pointed out that the increasing availability of buy to let mortgages and strong demand for rental accommodation is further stimulating positive sentiments, with rent arrears appearing to stabilize and void periods decreasing in recent months.

‘The private-rented sector is demonstrating its resilience, in marked contrast to some other industries and investments. Like other business people, it is clear that landlords are not immune from the effects of financial uncertainty. The fragile state of the economy is a concern for landlords, many of whom have mortgages to pay or rely on their property portfolios to earn a living,’ explained Salusbury.

However, he warned that cuts to local housing allowance are a further worry for tenants and landlords alike. ‘Both should be mindful of how they may be affected and give consideration to how they will deal with the long term consequences of welfare reform,’ he added.

National lettings specialists Belvoir, who have more than 140 offices across the UK, say that the survey accurately reflects the trends they are seeing from their own landlords, but urges investors to seek expert specialist advice before committing to the purchase of a rental property.

‘The index reflects the general feeling of our landlords, many of whom are planning to expand their portfolios in the coming months and years. We have seen rents increasing by 3 to 5% a year, a healthy level of increase that is in line with inflation. The outlook is very good and there is a sense of positivity and optimism across the industry,’ said Dorian Gonsalves, managing director of Belvoir Lettings.

‘However, I would urge landlords to think carefully before investing with investment clubs and below market value operators, who are once again becoming very active in buy to let by appealing to landlords who think they can make a quick profit because they read headlines such as buy to let booming. Investment landlords need to be sensible and realistic and beware of promises that simply cannot be achieved,’ he explained.

‘Landlords also need to be clear about their business plan going forward and should take advice on property types, tenant demand and location, as well as doing detailed research to ensure they buy the right property and not just one that seems cheap at the time. If a property is extremely cheap, there is probably a reason for it,’ he added.

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