Uncertain future for lettings, following spending review
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.”