Long term tenancies could soon become the norm for people renting property in London as more people opt to stay for two to three years due to a shortage of alternatives, it is claimed.
According to independent lettings agents Felicity J Lord, the trend for 2012 will be longer tenancies and this will give landlords and tenants stability.
‘Rents in London have risen faster than any other part of the UK in the last year. Whilst they have showed signs of slowing down since October, the cost of renting is still rising annually at nearly twice the speed of the average salary and as such tenants will need to dedicate a growing portion of their disposable income to the cost of accommodation,’ said Mariella Petralia, divisional lettings director for Felicity J Lord.
‘As a consequence, tenants are preferring to stay where they are for longer than ever before to avoid having to look for an affordable and available alternative. We are also finding that this is suiting many landlords as it offers the security of tenure rather than the potential for expensive void periods,’ she explained.
‘This isn’t to say that we aren’t seeing tenants opting for twelve month rentals because they still represent a huge proportion of the lettings market for our branches, but the trend is definitely towards long term tenancies in London,’ she added.
Meanwhile, the Association of Residential Lettings Agents (ARLA) says that down letting is becoming more popular.
‘With many potential buyers struggling to secure a mortgage, letting your family home rather than selling offers a strong alternative,’ said ARLA’s president, Tim Hyatt.
‘Rental returns stand at an average of 6.1% this year, according to research from Knight Frank. This substantially beats the returns on many other current investment opportunities,’ he added.
ARLA members also report that achievable rent levels are increasing, while demand for good quality rental properties remains high. ‘
‘While market conditions remain so inclined, it could be prudent to let out the family home, and use the monthly rental income to invest in renting a smaller retirement home,’ explained Hyatt.
According to ARLA research, ‘renting to retire’ is also a key motivating factor in the buy to let market. For example, more than two fifths, 42%, of today’s landlords originally invested with a view to creating a retirement nest egg.
As more people decide to let out their properties ARLA is reminding would be landlords to remember to notify their mortgage and insurance providers as letting out a property requires a different form of mortgage from owner occupation and buildings and contents may not be covered.
It also points out that there are also regulations governing the installation of electrical equipment in rental properties. The same is also true for gas appliances, which must be certified and checked annually.