In a world of apparently perpetual doom, landlords manage to buck the trend during 2011.
Despite darkening economic clouds, landlords across the country found themselves enjoying increased demand for their property – and, as a result, rising rents.
Let’s take a trip down (recent) memory lane and remember some of the bigger stories of the year – and look forward to 2012.
2011 was characterised by dramatic increases in demand for rental property. Figures from Countrywide suggested that properties were let in an average of just 12.7 days during the third quarter of the year. In certain parts of the country properties were on the market for significantly less time – often just a matter of hours.
Increased demand was driven by a combination of rising property prices, constrained mortgage availability, and general uncertainty about the country’s economic future. Rents were pushed up as a result, reaching new records in virtually every part of the country.
… but arrears increase
The flipside to this has been an increase in the number of tenants late with their rent. According to LSL Property Services some 10.7 per cent of rent was either late or unpaid towards the end of the summer, with the total increasing by almost 20 per cent during August.
Localism Bill gets assent
The Localism Bill gained Royal Assent earlier this year, paving the way for a number of significant and controversial changes to planning, housing, and local government.
For landlords the impacts include the relaxing of rules on tenants’ deposits. Landlords now have 30 days in which to comply with deposit protection requirements, rather than the previous 14. In addition, judges will be given discretion of penalties charged for non-compliance. Under the previous rules an automatic penalty of three times the deposit applied.
Housing Benefit changes
Although the impact has not yet been felt, changes to the Housing Benefit regime were amongst the most significant landlord stories of the year. The government has said that it intends to bring down the total Housing Benefit bill by imposing a cap on payments. But critics have insisted that the changes will see thousands of people forced to move home. Several MPs have said the impact will be a “cleansing” from city centres of those on low incomes. Meanwhile landlords will have to deal with a reduced ability to pay amongst many tenants in receipt of Housing Benefit.
2012 looks set to be another turbulent year for the world economy – but things might be looking up for landlords. Continued demand for rental property has meant that rents are still increasing, and competition between tenants is often fierce.
But the more general economic outlook is less certain. Some commentators are predicting an interest rate hike next year, with mortgage costs being adversely affected. Meanwhile pressures on mortgage availability could make portfolio expansion challenging.
Despite these concerns, landlords find themselves finishing 2011 in a good position. Here’s to 2012!