June 11, 2012

A recent report published by estate agents Savills, forecasts a rise in the number of privately rented homes saying they will account for one in five households by 2016. With demand for rented properties showing no sign of slowing down in the next five years, it is unlikely that there will be sufficient supply to meet this level of demand.

The report goes on to note that “The shift towards Rental Britain shows little sign of slowing in the near future. Britons paid in excess of £48 billion in rent to private and institutional landlords. This figure is forecast to rise to exceed £70 billion by 2016.Whilst there is little doubt that rental demand will increase, the pipeline of new rental supply is likely to be the main constraint on the expansion of the sector. Over the past 10 years we estimate that over £380 billion has been invested in the private rental sector of which over £140 billion was in the form of buy to let mortgage finance. Rental Britain needs a further £200 billion to be invested in private rented sector housing to meet tenant demand over the next five years.”

“We believe that in the order of 75% of this will have to be financed otherwise than by way of buy to let mortgages. This will require a combination of private and institutional investment. Smaller private investors are likely to look beyond the short to medium term, banking on a return to house price growth of inflation plus 2.5% to 3.0%. They are likely to balance income yield and capital growth prospects and invest across the UK. By contrast, larger institutions are expected to chase income yield more aggressively, particularly given relatively low house price growth prospects over the next five years.”

Julie Grieve,  Managing Director of Braemore said “There is no doubt that demand for rental properties in Edinburgh and across the UK continues to grow. There is an opportunity to secure a decent yield and capital growth over the long term and more people are recognising that investing in residential property should form part of their general retirement planning and for some people it forms part of their retirement income as the yield is so much better than they can achieve elsewhere and over the long term they will see capital growth.  It is a safe place to put your money in these times of uncertainty with such a turbulent stock market.”

Clients interested in securing another property should contact julie.grieve@braemore.co.uk to discuss their requirements;  Braemore’s sister company Lomond Property Asset Management is now well established and finding yielding properties for our clients.

http://www.savills.co.uk/_news/newsitem.aspx?intSitePageId=72418&intNewsSitePageId=119059-0&intNewsMonth=3&intNewsYear=2012