RENTS Higher values return to lettings
The beginning of 2011 saw an influx of higher value property into the Private Rented Sector
(PRS), according to the latest research from the Association of Residential Letting Agents (ARLA). Research for Q1 2011 shows an 11.6 per cent increase in the average capital value of rental houses, from £401,400 to £447,900. Previously, this figure had declined following the last market peak at £442,600 in 2007. ARLA says that this growth
was driven by London and the South East, with a 14.8 per cent increase in average capital value in central London and 16.2 per cent in the rest of the South East. The rest of the UK experienced a drop (5.2 per cent). According to ARLA, this growth is due to an increase in family homes coming onto the rental market, which generally carry a higher value than smaller homes. Ian Potter, operations manager of ARLA, said, “We
believe that this increase in the overall average capital value of rental properties has been driven by different types of home being offered to let. Today’s housing climate and uncertainty around jobs and income means many people are choosing to let rather sell their home, causing an increase in the number of family-sized homes available to rent.” ARLA’s research shows that,
of the 39 per cent of ARLA members reporting an increase in property coming onto the market because it could not be sold, the biggest proportion was for family-sized homes, with 66 per cent reporting an increase in semi-detached and 63 per cent reporting an increase in detached houses. ARLA research also showed a slight rise in the average capital value of rental flats, from £258,500 to £267,400 (a 3.4 per cent increase). Again, this occurred mainly in central London (4.7 per cent) and the South East (4.4 per cent), with a 1.7 per cent drop in the elsewhere in the UK. Members say they are
seeing higher rents in many regions, Philip Chadwick, Director, Gascoigne Halman in South Manchester and North Cheshire said, “The BBC relocation to
Manchester and that of another major PLC to the region has certainly bolstered demand for good quality family sized accommodation in this area and that demand continues to outstrip supply. “Over the past 12 months,
there is no doubt we have let many more properties with a capital value of between £400,000 and £1 Million plus, and even a quite a few in the £2 Million to £5 Million price range, with rents reaching a eye-watering £25,000 per calendar month.”
OLYMPIC GOLD Landlords cash in on Boris’s bikes
Landlords in East London are set to benefit from the 5 per cent boost to rent that a London cycle hire docking station brings when the scheme is expanded eastwards, says Ludlow Thompson. The cycle hire scheme will be
extended further into east London in time for the Olympics, to include popular places to rent like North Shoreditch, Bethnal Green, Bow and Mile End. 4,200 docking points will be added and 2,000 more cycles will be put into circulation. Chris Dean, Lettings Director at ludlowthompson’s City and East London office, says that the cycle hire scheme has been so popular with tenants that properties near a docking station are attracting a 5 per cent boost to rental values. “Prospective tenants are
increasingly asking where the nearest docking stations are – the effect of the Boris bike scheme has
had on the lettings market is far greater than anyone imagined.” Ludlow Thompson says that the eastward expansion is likely to have the biggest effect on properties not near tube stations. Chris Dean says, “It has almost
been a cast iron rule, that the closer the distance to a tube station; the higher the rent on a property has been. Now a cycle docking station has a similar effect. Often people use a Boris bike to get to the tube, but even though it’s only part of their commute it can really speed it up!” Tony Varghese, Buy-to-let Manager at ludlowthompson’s City and East London office, explains, “Investors looking for a buy-to-let property in east London should keep an eye out for planning applications made by TfL for new cycle docking stations, because they are now a real selling point for tenants.”
PROPERTYdrum MAY 2011 53
Theresa Wallace, Director,
Savills in Kent, said, “Although we have experienced a shortage of property this year whilst landlords have returned their properties to the sales market, the demand continues to grow and in recent weeks, some high quality family homes have been coming onto the rental market. Having seen many landlords return from abroad last year we are now seeing more who will be relocating abroad this year and are getting their homes in order to let in the summer. “In addition, demand has
increased from professional couples unable to secure mortgage finance, and we are also seeing longer-term tenancies.”
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