Painting a Clear Picture of the UK Residential Lettings Market

There is a really good report on the UK residential rentals market from the BDRC research agency. According to the report a quarter of all landlords have seen profits fall in the 3rd quarter, 7% had recorded a small loss and 1% a large loss.

It said that, though half the respondents said they increase rents at regular intervals, in the last 12 months 19% have decreased their rent, 27% have increased it and 49% have kept it the same.

But the finding that will be the biggest surprise to many is that 20% of current landlords have been in the game for less than 24 months, with only 1 in 20 of those forced into renting when they were unable to sell.

This confirms what I have been saying in many articles, including this one, and this one, that the flurry of repossessed auctions earlier this year was primarily attended by novice investors.

As I covered in the first article linked above, recently an Association of Residential Lettings Agents survey found that the average number of properties owned by residential landlords had increased from 6.4 in March this year, to 7.5 in June, before falling back to 7.0 in September.

ARLA said that this indicated that residential landlords have been buying property this year. Critics said it was simply because of the number of novice 1 and 2 property owners who have been repossessed since the onset of the downturn.

The BDRC report contradicts them both. However, the ARLA survey suffers from a reduction in the number of respondents, and also the fact that it is primarily investors with large portfolios who use the services of letting agents. One or two properties can easily be marketed by the landlord, and that is far healthier on the cash-flow.

The BDRC report paints the most accurate picture of the UK residential lettings market, because it both backs-up and is backed-up by other impartial reports on the market, including those on the auctions earlier this year.

• Repossessed Homes Go Under the American Hammer
• UK Properties Snapped Up By Opportunistic Investors
• The Big Repossession Sell Off
• House Price Crash Forum on Repossession Auctions, primarily posted to buy investors

Landlords will therefore be happy that the report painted a much brighter picture of the market in 2010.

Mark Long, director at BDRC, said: "With 2009 characterised as a year of survival for many landlords, we are starting to see signs of a brighter future into 2010.

"Despite the current profitability situation, as shown by the findings in the latest wave of the Landlords Panel survey, prospects for rental yields do appear to be improving in line with our landlords' optimism index.

"The UK's private landlords are a resilient bunch and will opt for a strategy that allows them to protect their income and portfolio."

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