heavily dominated by advisers. Last year saw a number of new entrants to this market and some old names re- emerge. Our discussions with lenders suggest that this will be an important battleground in 2011 with greater competition for business than we have seen for a while.
As buy-to-let funding becomes
easier, there will be more interest from professional landlords and those with a portfolio of properties. It is important for brokers to re-establish contact with any landlords where this may have drifted away as a result of buy-to-let funding drying up.
The long term outlook for returns on buy-to-let is still very positive; landlords and potential landlords can be reassured that tenant demand is still incredibly high. The total annual return on an average property was 7% in December – the equivalent to £11,431 - £7,332 in rent, and £4,099 in capital gains. And, despite the rental falls in December, with average rents standing at £684 per month, rents in December are still 3.8% higher than they were a year ago.
Looking at the national picture only gives one view however. In it there are a number of stark regional variations. London and the South East are still very healthy markets, driven by offshore cash; the outlook for 2011 for this part of the country looks positive. Less so the regions further away from the capital; the northern regions, Scotland and Wales have already seen notable drops in house prices over the course of the year, and it is these regions that are likely to be most hit by the Government cuts. In addition rents fell fastest in Wales in December, although all regions were affected by monthly falls. It is, of course, dangerous to draw too many conclusions from one month, especially December, because of the lull over the Christmas period, and with this year especially affected by the arctic weather, transactions were even lower than they would have been normally. We do not expect any major changes over the next few months, but the challenging economic conditions are
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likely to lead to more easing of house prices, and there are some risks that the Government’s policy on rental payments to people on benefi ts could also halt the rapid rise in rents that we have experienced in the last year. Intermediaries can play an important
role in explaining to customers what is happening in the housing market, both at a national and a local level.
There is now plenty of data available to intermediaries, to help customers understand the facts behind the headlines, and this is just one of the ways in which the extra value offered by an intermediary can be demonstrated. As in 2010, the intermediaries and customers that prosper in 2011 will be those who best adapt to the market conditions.
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