Uncertain future for lettings, following spending review
Comment
from Mark Daruvalla, Business Development Director at CFP Software
“The Government’s Spending Review has confirmed the uneasiness
within the lettings sector, as all players in this market are nervous about the
full impact which will not really be known until next year and beyond. Whilst
it is true that currently agents are experiencing an increase in demand and a
shortage in supply for private rented property, which is pushing rents up on
the one hand, there is also a fear of the future, making landlords and agents
cautious about increasing rents, especially on existing tenancy renewals.
Agents and landlords are looking to next year when jobs may be lost, VAT is
going up and thinking that they do not want to add the straw to the camel’s
back by increasing rents causing tenants to default or move out and leaving
them with arrears, vacant periods and new tenancy costs.
“An interesting side effect of the squeeze, which goes some way to
mitigating the shortage of rented property, is the effect that low interest
rates and lack of confidence in the banks is having on the supply of private
rented property. Some landlords are thinking that they can get a better yield
on property than leaving funds on deposit in banks and this, coupled with the
wobble in the banking sector last year, has tempted them to shift their
investment into property; a perceived safer investment with a higher yield.”
