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02 Monday Dec 2013

2014: what’s in store for buy-to-let? Posted by:

Difficulties in obtaining mortgage finance in the past few years has meant many would-be buyers have been forced to rent instead, pushing up rents and attracting more investors into buy-to-let. But with government assistance schemes such as Help to Buy enabling more people to get on the housing ladder, what does 2014 have in store for buy-to-let?

George Spencer, CEO of Bien Media client Rentify, the leading online service for tenants and landlords, says: ‘2013 saw strong demand for rental property pushing up rents in some areas, although not all. This has encouraged investors into the market, viewing bricks and mortar as more attractive than savings accounts or equities, given historically low interest rates and returns.

‘A rise in the number of landlords in 2013 should result in more rental property becoming available in 2014, which will curb some rent rises. We expect rents to plateau more in 2014 in line with inflation figures, although London is truly establishing itself as a micro-market, with its own rules.

‘In London, demand for rented housing is outstripping supply and rental pricing is on an upwards trajectory. This will force more tenants to seriously consider buying as opposed to renting.’

However, Rentify does not expect schemes such as Help to Buy to lead to a substantial decline in tenants.

Rentify’s Spencer continues: ‘There will always be plenty of people who, for whatever reason, cannot buy a property.

‘The outlook for buy-to-let is healthy, with strong yields continuing, but landlords should not see it as a get rich quick scheme. Instead, they should invest for the long term and think about looking after their existing tenants, rather than hiking rates at every opportunity. Our landlords prefer to maintain rents at the same level to keep loyal tenants, rather than hike rents and risk losing them. This results in void periods – every landlord’s worst nightmare.’

However, there will be plenty of challenges facing landlords in 2014.

Spencer adds: ‘More regulation, with the prospect of letting agent licensing, the government mooting the need for landlords to vet tenants for immigration status, and calls for property rental and price controls will keep landlords on their toes.’