How Will the Increase in Renting Affect the Property Market?
Ian Robinson
Of all the various markets that have been hit by the recession, few have been as totally and utterly decimated as the property and mortgage markets. Of course, with the benefit of hindsight and intense scrutiny by everyone from politicians to journalists to local shopkeepers as to the reasons for the economic collapse, it is far from a new theory to suggest that it was the unrealistic borrowing and lending in relation to, particularly, the property and mortgage markets that led to the recession. Broadly speaking, that can be taken as simple fact.
However, whilst many are still debating the nuances of the economic collapse we experienced the rest of us have simply picked ourselves up and tried to cope with it as best we can. The good news is that, according to many in the property and mortgage industries, the first signs are recovery are now in sight. Although the recession is far from over ? and the effects of it will certainly be felt for many years to come ? there are some particular indications and trends in the housing market that show promising things, and some argue that one of these indications is the increase in renting.
Whilst certain studies that have been recently published show that there is still plenty of interest in buying houses ? viewing figures, for example, are increasing at a steady pace ? it is no longer the buyer?s market it once was. This is generally because there is still a vast deficiency in mortgage credit, which in turn means far less sales. As a result of this many more properties are being place on the market for rent. London, which is often a reliable indicator of what is happening in other cities around the country, has seen an increase of one hundred and twenty eight percent (128%) in owners who are renting out their homes. For those unable to sell, letting out a house at least provides an income whilst the housing market takes its time to get back on its feet.
One of the consequences of this increase in property acquirable to rent means that rents have gone down almost crossways the board. The implications of this can be seen on a top property website, which has shown that the average amount in weekly rents in London can be seen to have steadily decreased over thirteen months, with apiece month showing a lower average than before.
Whilst this is great news for renters wanting to negotiate a lower price with landlords, some economists say that this increase in rental property does not necessary mean that such activity levels will help to stabilise the house prices in the coming months. Unfortunately, a mixture of high unemployment levels and reluctance on behalf of buyers to purchase property seem to back up this notion.
Other economists, however, are more positive and insist there are signs to show improvement. There have been, for example, steady rises in the number of house purchase loans approved since the end of winter, and, equally importantly, a number of banks are beginning to boost the mortgage market with new ranges of mortgages.
The increase in renting, on the other hand, means little to most in the property market except for the fact that the journey back to the heights enjoyed just over a ago by the property and mortgage markets is going to be a very slow and arduous one.
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Ian Robinson heads the commercial and family team of solicitors in Hampshire as Senior partner at Churchers Solicitors who are also specialist Hampshire commercial solicitors.