Insurance News
Rent prices 'may be stabilising'
30th April 2012
The private rental sector has been one of the few areas of the British housing market that has performed well in recent years, with investors benefitting from profitable buy-to-let properties, high tenant demand and increasing yields.
Yet while rent prices have appeared to maintain a strong upward trend, levels can only rise so high before they become unaffordable - especially given that inflation rose last month.
With this in mind, the latest figures from the Association of Residential Letting Agents (ARLA) may come as little surprise, as they suggest that rent charges could be set to stabilise in the near future.
Tim Hyatt, ARLA president, said: "Our data suggests that things could be changing in the PRS as the amount being charged for rent is beginning to stabilise in some parts of the UK."
According to the organisation's report, 50 per cent of its members witnessed increased achievable rent levels in the first quarter of 2012, but it is the fact that this is down from 60 per cent nine months ago that indicates prices could be balancing out.
However, while the news indicates that recent rental trends could mean prices are reaching their peak, the buy-to-let sector remains a particularly profitable area for investment - and Mr Hyatt believes there is still a problem of undersupply to be solved.
"The key challenge of undersupply has not been solved and there is still a need to provide the right housing, in the right places, across the wider housing market," he added.
Considering that the report also found the average void period increased to three weeks, investors may begin to consider how to reduce this timeframe as uninhabited properties do not yield profit.
Indeed, ensuring that all holdings remain occupied for as long as possible is a key factor for landlords to take into account, so block insurance policies that cover any damage that may leave tenants having to move out for a short period of time could also prove vital.
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