2009 has been a mixed bag for rentals. The beginning of the year was horrendous with a large number of notices being given by tenants due to affordability issues. This in turn led to unprecedented levels of rental properties being up for re-let. Many agents found themselves struggling to fill properties with between 20% and 25% of their lettings portfolio re-available at one time. Unfortunately, this contraction in the demand also led to reductions in the market rents achievable with many Landlords having to discount the asking rent on their properties by 10%-15% to help re-let the property quickly.

Although May to August has seen significantly higher levels of tenants wishing to rent, rental values remain low and are unlikely to increase much, if at all, during the rest of 2009. Whilst interest rates stay low, and therefore borrowing cheap, this drop in rents will not concern most Landlords too much. However, if the cost of the borrowing increases over the next six months, I would expect to see a good number of Landlords either looking to increase their rents or to sell their properties.

Our prediction for 2010 is that a large number of reluctant landlords who have been letting out their properties over the past 18 to 24 months (because they couldn’t sell), will put their properties back on the market in the Spring. With the expected increase in activity in the sales market, it is likely that many of these properties will sell next year and thereby reduce the supply of rental properties. This, in turn, should push the rental values up over the course of next year, though probably by less than they have come down!

As a final word, we would continue to recommend rental guarantee and legal expenses insurance for all Landlords in what is still an uncertain economic environment.

This entry was posted on Monday, October 5th, 2009 at 2:34 pm and is filed under Recent News .